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Public Service Commission of Wisconsin

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TABLE OF CONTENTS Table of Contents ........................................................................................................................... i

Public Service Commission Members..........................................................................................1

Organizational Chart.....................................................................................................................2

Regulatory Mission ........................................................................................................................3 Set Rates and Services ...........................................................................................................3 Jurisdiction.............................................................................................................................3 Non-Jurisdiction.....................................................................................................................3

Electric Division .............................................................................................................................4 Commission Approves WP&L Pilot Biogas Program...........................................................4 Wisconsin Renewable Resource Credit Tracking Program...................................................4 Commission Wins Lawsuit on Constitutionality of Holding Company Act .........................4 Commission Issues Report to Legislature on Alliant Energy Holding Company Audit .......5 Commission Approves MGE Application to Form Holding Company ................................5 Commission Approves Recovery of Transmission Costs......................................................5 Rulemaking Regarding Municipal Rights-of-Way Issues .....................................................5 Service Rules for Electric Utilities .......................................................................................6 Revision of the State Electrical Code ...................................................................................6 Distributed Generation Interconnection Rules ......................................................................6 Strategic Energy Assessment.................................................................................................7 Expanded Strategic Energy Assessment...............................................................................8 De Pere Acquisition ...............................................................................................................8 Commission Approves Mirant Plover Power Plant...............................................................8 Commission Approves Power Plant in Beloit .......................................................................9 Commission Approves Superior Generation Project.............................................................9 Commission Approves Power Plant in Port Washington ......................................................9 Commission Approves Calpine Power Plant in Fond du Lac .............................................10 El Paso Muskego Withdrawal of Power Plant Application.................................................10 Incomplete Generation Applications ...................................................................................10 Fox Energy Power Plant in Kaukauna................................................................................11 Manitowoc Public Utilities Cogeneration Unit ...................................................................11 Madison Gas and Electric’s West Campus Cogeneration Facility ......................................11 Wisconsin Public Service Corporation’s Weston Unit 4.....................................................12 WPSC Declaratory Ruling...................................................................................................12 Commission Issues Final EIS for the Elm Road Generating Station ..................................13 Commission Amends Order in Chisago Transmission Line Case.......................................13 Arrowhead-Weston Transmission Line ...............................................................................13 Formation of the Organization of Midwest States...............................................................14 PSCW Involvement in FERC Issues ...................................................................................15 Midwest ISO........................................................................................................................15 Utility Refinancing ..............................................................................................................15 Transmission Dockets..........................................................................................................16

2001-2003 Biennial Report

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Electric Rate Cases -- Municipally-Owned Utilities ...........................................................16 Electric Rate Cases – Investor – Owned Utilities................................................................18

Natural Gas Division....................................................................................................................19 Interstate Pipelines...............................................................................................................19 Natural Gas Prices ...............................................................................................................19 Fixed rates/fixed bills...........................................................................................................20 Gas Only Rate Cases............................................................................................................20 Natural Gas Supply Plans ....................................................................................................21 Natural Gas Construction Orders.........................................................................................21 Natural Gas Construction Projects.......................................................................................21

Water, Compliance and Consumer Affairs ...............................................................................24 Uniform System of Accounts Municipal Utilities ...............................................................24 Accounting Treatment for Contributions in Aid of Construction........................................24 Public Fire Protection - Rate Filings....................................................................................24 Benchmarks 2003 ................................................................................................................24 Simplified Rate Cases..........................................................................................................24 Water Rate Cases .................................................................................................................25 Consumer Rules...................................................................................................................25 Water and Sewer Rate Orders July 1, 2001, to June 30, 2003.............................................25

Telecommunications Division .....................................................................................................30 Competitors Increase Market Share.....................................................................................30 SBC Wisconsin Unbundled Network Elements ..................................................................30 SBC Wisconsin Unbundling Requirements.........................................................................31 SBC Wisconsin’s Operational Support Systems .................................................................31 SBC Wisconsin Entry in InterLATA Long Distance ..........................................................32 ETC designation granted to US Cellular .............................................................................32 Interconnection Agreements ................................................................................................32 Voice Over Internet Protocol (VOIP)..................................................................................33 Rates.....................................................................................................................................33 Infrastructure Report to the Legislature...............................................................................34 Wisconsin Builders Association Complaint ........................................................................34 AmeriVoice..........................................................................................................................34 Continuing Telecommunications Consumer Education Efforts ..........................................35 Price Regulation...................................................................................................................35 Productivity rulemaking ......................................................................................................35 Price Regulation Rulemaking ..............................................................................................36 Price Regulation Rate Adjustments .....................................................................................36 Alternative Service Quality Standards.................................................................................36 Alternative Regulation.........................................................................................................36 Eleva Petition for Extended Area Service ...........................................................................37

Universal Service Fund................................................................................................................38 Lifeline and LinkUp Program and Other Programs for Low Income Customers ...............38 Nonprofit Access Grant Program ........................................................................................38 Telemedicine Grant Program...............................................................................................39


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Public Interest Pay Telephone Program...............................................................................41 Telecommunications Equipment Purchase Program (TEPP) ..............................................41

Administrative Services...............................................................................................................42 Alternative Work Patterns ...................................................................................................42 Affirmative Action...............................................................................................................42 PSC Receives 2001 Diversity Award ..................................................................................42 Wisconsin Works Program ..................................................................................................43 Office of Information Technology.......................................................................................43

List of Acronyms..........................................................................................................................45

Contact Information ....................................................................................................................47 * * *

Back page for table of contents


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PUBLIC SERVICE COMMISSION MEMBERS

Burneatta Bridge Chairperson

Term Expires March 2009

Ave M. Bie Commissioner


Robert M. Garvin Commissioner


Daniel Ebert Executive Assistant to the Chairperson


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ORGANIZATIONAL CHART

CHAIRPERSON Commissioner Commissioner

Executive Assistant to Chairperson

Legislative Liaison

General Counsel

Secretary to the

Commission

Public Affairs Director

Division

of

Adminis-

trative

Services

Electric

Division

Natural

Gas

Division

Telecommuni-

cations

Division

Division of

Water,

Compliance

and

Consumer

Affairs

Executive Assistant Executive Assistant

Universal Service Fund

Manager


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REGULATORY MISSION

The Public Service Commission of Wisconsin (Commission or PSC) is an independent regulatory agency responsible for the regulation of 1,235 Wisconsin public utilities, including those that are municipally owned. The Commission's mission is to ensure that in the absence of competition, safe, adequate, and reasonably priced service is provided to utility customers.

Set Rates and Services The Commission sets utility rates and determines levels for adequate and safe service.

Other major responsibilities include the approval, rejection, or modification of the utilities' major construction applications (such as power plants and transmission lines), and the approval of utility stock issuance and bond sales. The Commission staff, under the direction of the Commissioners, also conducts special programs, such as research on the cost of providing various utility services.

The Commission, which receives its authority and responsibilities from the State Legislature, enjoys a national reputation for its innovative and forward-looking approach to the field of utility regulation.

Jurisdiction The Public Service Commission's regulatory powers and duties extend to:

27 Electric Utilities 9 Water Investor Owned Utilities

13 Gas Distribution Utilities 1 Heating Utility

84 Telecommunications Utilities ( 11 Cooperatives) 513 Alternative Telecommunications Utilities (ATUs) 588 Municipal Utilities (including 26 Sewer Utilities*) 433 Water Utilities* 73 Sanitary Districts 15 Electric Utilities 67 Joint Water and Electric Utilities*

1,235 Total Utilities * The majority of Sewer Utilities are joint with Water

or Water and Electric Utilities, but there are a few Sanitary Districts with Sewer Departments.

Non-Jurisdiction In Wisconsin, most activities of the state’s 27 electric cooperatives are not under the

jurisdiction of the Commission. Furthermore, fuel oil, propane, coal, and gasoline are energy sources not under the Commission's jurisdiction.


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ELECTRIC DIVISION

Commission Approves WP&L Pilot Biogas Program

The Commission approved a Biogas Renewable Energy Distributed Generation (BREDG) Program for Wisconsin Power and Light Company (WP&L). The program is designed as a demonstration project to encourage the development of a renewable fuel supply of methane gas derived from farms, landfills, wastewater treatment plants, and food processing plants.

Under the program, WP&L will pay distributed generators the equivalent of 6 cents per kilowatt-hour (kWh) for electricity delivered to the grid. Project participants would either contract with WP&L to provide and maintain the electrical generation equipment or own and operate the generation equipment using financing provided by WP&L. The application lists benefits of the BREDG as: mitigation of electric generation capacity constraints, a new revenue stream for participants, a demonstration program, encouragement of sustainable rural economic development, and improved environment from reduced methane air emissions.

Wisconsin Renewable Resource Credit Tracking Program In September, 2002, Clean Power

Markets, Inc., was hired to administer the Renewable Resource Credit (RRC) Program as required by Wis. Admin. Code ch. PSC 118. The RRC Program is part of the Wisconsin Renewable Portfolio Standard that went into effect on January 1, 2001, requiring every electric provider (IOUs, municipal utilities and co-op associations) in Wisconsin to obtain an increasing portion of

their electrical supply from renewables--up to 2.2 percent in 2011.

For 2001 and 2002, each electric provider was required to obtain 0.5 percent of its retail electric sales from renewable resources. Electric providers participating in the program averaged 1.3 percent of sales from renewable resources in the first year, 2001. One hundred sixteen electric providers exceeded their requirements and were eligible to create RRCs that can be either banked or sold to other companies. The program administrator, CPM, has established a web-based tracking system to keep track of RRCs as they are created and traded.

Commission Wins Lawsuit on Constitutionality of Holding

Company Act Federal District Judge John Shabaz

sided with the PSC and the Department of Justice on all counts in a lawsuit in which Alliant Energy argued that Wisconsin’s Holding Company Act unreasonably interfered with interstate commerce under the U.S. constitution.

The Court found that the Act did not unreasonably interfere with interstate commerce and that the state has a legitimate interest in protecting the financial health of the regulated utility. The court also found that Alliant was not permitted to challenge the restrictions of the law under which it was formed. Utility holding companies’ ability to invest in outside ventures was recently expanded by the Legislature in the 1999 Reliability Act. Alliant has appealed the ruling to the Seventh Circuit in Chicago.


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Commission Issues Report to Legislature on Alliant Energy

Holding Company Audit The Commission issued its report to the

Legislature and audit of the Alliant Energy Holding Company. The PSC is required to submit reports and audits of holding companies every two to three years under state law. The PSC audit focused on increasing debt levels for the Wisconsin Power and Light utility and the Alliant Energy Holding Company, as well as allocation of executive officer pay. Alliant has committed to infusing $260 million into WP&L by the end of 2003.

Commission Approves MGE Application to Form Holding

Company The Commission approved the

formation of a holding company for Madison Gas and Electric (MGE). Under the approved holding company structure, MGE will be a wholly owned subsidiary of MGE Energy, along with Central Wisconsin Development (CWDC), and MAGAEL, LLC (MAGAEL). CWDC assists new and expanding businesses in central Wisconsin in their planning, financing, property acquisition, joint ventures, and related activities. CWDC has only nominal assets. MAGAEL is a real estate holding company which holds title to properties acquired for future utility plant expansion and non-utility property. In its review of the application, the Commission found that the formation of the holding company would not harm the utility or investors. The Commission imposed records retention and other requirements on MGE as conditions of its approval.

Commission Approves Recovery of Transmission

Costs The Public Service Commission

approved cost recovery for Wisconsin’s four largest Investor Owned Utilities for start-up and operating costs of the American Transmission Company. Cost recovery for other transmission expenses was also approved. The decision reflects authorized costs that will be recovered from ratepayers. For customers of Wisconsin Power and Light and Wisconsin Public Service Corporation, these costs ($20.5 million and $14.1 million, respectively) are included in present rates. We Energies and Madison Gas and Electric will collect the costs ($48.1 million and $.5 million, respectively), through a surcharge on customers’ bills.

The 1999 Wis. Act 9 authorized utility holding companies to exceed the asset cap (limitations on non-utility investments by holding companies) in exchange for divesting transmission assets to a new Wisconsin transmission company. These four utilities divested their transmission assets in 2000, and ATC began operation on January 1, 2001.

The charges reflect costs in two key areas: infrastructure investment and improved, centralized electricity dispatch. Both areas lead to better access to economic generation and improved system reliability.

Rulemaking Regarding Municipal Rights-of-Way

Issues On June 2, 1999, the Commission

approved a Statement of Scope indicating its


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intent to initiate rulemaking as to standards or guidelines to be used to resolve disputes involving public utility access to and use of municipally-owned rights-of-way under Wis. Stat. § 196.58(4). Draft rules were issued June 21, 2001, and a hearing was held July 27, 2001. Subsequent to legislative review and minor modification, the Commission adopted final rules on April 30, 2003. The rules became effective July 1, 2003.

Service Rules for Electric Utilities

On May 16, 2000, the Commission approved an order adopting rules to repeal and recreate ch. PSC 113, Wis. Admin. Code – Service Rules for Electric Utilities. These rules went into effect on August 1, 2000. The service rules require numerous utility reporting requirements in the areas of reliability, safety, and consumer service to be monitored by Commission staff.

On April 23, 2001, the Municipal Electric Utilities of Wisconsin (MEUW) filed a petition with the Commission to initiate rulemaking and specifically to amend those provisions in ch. PSC 113 relating to customer satisfaction surveys so that their application to municipal utilities would be discretionary, not mandatory. On April 23, 2002, a public hearing was held to address MEUW’s proposed revisions, and various other minor updates and modifications to be incorporated into the rulemaking.

On November 1, 2002, the Commission adopted an order to modify the service rules relating to customer satisfaction surveys to apply only to utilities with customer counts of 20,000 or more, unless otherwise deemed necessary by the Commission.

Revision of the State Electrical Code

Revision of Chapter PSC 114 of the Wisconsin Administrative Code became effective on July 1, 2003. This revision adopts the most recent (2002) Edition of the National Electrical Safety Code (NESC-2002) with certain changes, deletions, and additions. Volume 1 of the Wisconsin State Electrical Code consists of the 2002 Edition of the NESC and Chapter PSC 114, commonly known as the “Wisconsin Supplement.” It is administered primarily by the Public Service Commission of Wisconsin and deals with safety requirements for the installation, operation, maintenance of primarily outdoor electric supply and communications lines and facilities used by utilities, railroads, cable television providers, etc.

Distributed Generation Interconnection Rules

Commission staff has worked extensively with a stakeholder collaborative group to develop rules that will expedite installation of small electric generators, known as distributed generation (DG) facilities that are sited close to where the power will be used. On January 2, 2003, the Commission approved draft rules for interconnecting customer-owned electrical generation facilities of 15 MW or less to local distribution systems. On March 3, 2003, a hearing was held on the draft rules. Subsequently the rules have been modified to incorporate both comments from the hearing and those from the Legislative Council Rules Clearinghouse. Once the final rules are approved by the Commission, they will be sent to the appropriate committees in each house for their final approval.


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The objective of this rulemaking is to establish requirements for interconnection of distributed generation facilities that are, to the extent technically feasible and cost effective, uniform for all regulated electric utilities in Wisconsin. The rules define an application process; an application form; an interconnection agreement; requirements for grounding, metering, use of certified or non-certified equipment, safety equipment, power quality and testing; and compliance with applicable national, state, and local codes. The rules include a streamlined application process for facilities that have a capacity of less than 20 kilowatts.

Strategic Energy Assessment The Second Strategic Energy

Assessment (SEA), for the period January 1, 2002, through December 31, 2004, was approved by the Commission on December 19, 2002, for issuance in final form. The biennial SEA is the successor to the Advance Plan. The purpose of the SEA is to evaluate the adequacy and reliability of the state’s current and future electrical supply. Under Wis. Stat. § 196.491(2)(a), the SEA must:

1. Identify and describe all large electric generating facilities on which an electric utility or merchant plant developer plans to commence construction within three years; all high-voltage transmission lines on which an electric utility plans to commence construction within three years; any plans for assuring that there is an adequate ability to transfer electric power into eastern Wisconsin, and the state as a whole, in a reliable manner; the projected demand for electric energy and the basis for determining the projected demand; activities to discourage inefficient and excessive power use; and existing and planned generation facilities that use renewable energy sources.

2. Assess the adequacy and reliability of purchased generation capacity and energy to serve the needs of the public; the extent to which the regional bulk-power market is contributing to the adequacy and reliability of the state’s electrical supply; the extent to which effective competition is contributing to a reliable, low-cost, and environmentally sound source of electricity for the public; and whether sufficient electric capacity and energy will be available to the public at reasonable price.

3. Consider the public interest in economic development, public health and safety, protection of the environment, and diversification of sources of energy supplies.

The following assessments were made subject to qualifications: from a macroeconomic statewide perspective, the regional bulk power market has and is expected to generally provide an adequate and reliable source of capacity and energy to meet the needs of the public; generally there has been and is expected to be an adequate and reliable source of purchased capacity and energy on a macroeconomic statewide basis to meet the needs of the public; competitive markets are contributing to a reliable, low-cost, and environmentally sound source of electricity for the public; and sufficient supply resources in the form of bulk power or purchased power are generally expected, but there is some reliability concern for 2004 and at a continued reasonable price. From a microeconomic individual utility perspective, utility commentators believe these assessments may be too broad. Based on the experience of smaller electricity providers, the providers suggest that the generation outlook is problematic; there is a general inadequacy of the current transmission system; and the competitive market is not providing a reliable source of capacity at a reasonable price. The full SEA is available on the PSC’s website at:


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http://psc.wi.gov/electric/cases/sea/2002/seafinal.htm.

Expanded Strategic Energy Assessment

By statute the Commission is to commence another Strategic Energy Assessment (SEA) during 2004. There have been concerns that prior SEAs have been too limited by focusing on only three years of electricity supply and demand data. On June 27, 2003, Chairperson Bridge sent a request to the state’s electricity providers requiring them to file electricity supply and demand data for a longer 2003 to 2010 time frame. This information is due at the Commission by September 15, 2003. In essence, the June 2003 Chairperson’s request has started the 2004 SEA early. The new approach will address the weaknesses of using only three years of data. In addition to the usual SEA analysis, the Chairperson submitted a series of timely regulatory policy questions that electricity providers are to answer as well. Answers on these policy topics are also expected in mid September 2003. After receipt of the information, Commission staff will process a draft SEA that will likely be produced by early 2004. The draft report will be followed by a legislative type hearing in early 2004 with a final SEA expected sometime in April 2004. The final 2004 SEA will provide the public, electricity providers, and decision makers a broad overview of expected electric industry supply and demand developments in Wisconsin during the next seven years. Such an analysis will be able to identify shortcomings that need addressing by utilities, regulators, and\or the legislature.

De Pere Acquisition On June 11, 2002, Wisconsin Public

Service Corporation (WPSC) filed an

application with the PSC for authority to acquire the De Pere Energy Center (DEC) from De Pere Energy LLC (De Pere), a wholly-owned subsidiary of Calpine Corporation. The DEC is a 180-megawatt (MW) natural gas-fired simple cycle combustion turbine (CT) peak load generating facility located in De Pere, Wisconsin. De Pere obtained a Certificate of Public Convenience and Necessity to construct the facility in October 1997 and the DEC went into commercial operation in 1999.

WPSC signed a power purchase agreement (PPA) with De Pere on November 8, 1995. Under the agreement, which had a term of 25 years, the DEC would consist of a 180 MW CT and would be converted to a 255 MW combined-cycle facility in 2004.

On November 15, 2002, the Commission issued an order authorizing WPSC to purchase the DEC and cancel the PPA between it and De Pere, at a cost of $120.4 million.

Commission Approves Mirant Plover Power Plant

The Commission authorized the construction of 930 MW of combined cycle and simple cycle electric generation facilities to be constructed in the town of Plover, Portage County, Wisconsin. Mirant, LLC, a subsidiary of Mirant Corporation (formerly Southern Energy, Inc.), applied to construct a 590-MW base-load natural-gas fired combined cycle power plant, and four 85 MW natural-gas fired combustion turbines in the town of Plover. The Commission approved construction of the plant at the site on Hayes Avenue.

Mirant indicated in testimony at the public hearing that it will not begin construction of the plant in 2002 or 2003 unless it finds financial partners for the


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project. The Commission said that construction must be completed within 36 months. Mirant currently has no pre-existing power purchase arrangements with public utilities. The applicant still obtains permits from several other state and federal agencies.

Commission Approves Power Plant in Beloit

The Public Service Commission approved the application of Calpine Corporation to construct a 600 megawatt natural gas-fired power plant in the town of Beloit. Wisconsin Power and Light has contracted with Calpine for approximately 450 megawatts of electricity to be generated from the Riverside plant, which is expected to be on line for the summer cooling season in 2004. Wisconsin Power and Light must secure power from other sources in order to meet the required reserve margin of 18 percent for the summer of 2003.

Commission Approves Superior Generation Project

The Public Service Commission approved the application of Rainy River Corporation to build and operate a natural gas-fired simple-cycle 170 megawatt power plant in the city of Superior in Douglas County. Rainy River Corporation is a wholly-owned subsidiary of Minnesota Power.

The Commission required Rainy River to file a Construction Mitigation Plan to address environmental concerns, and to conduct a post-construction noise study to ensure that noise levels did not exceed the levels projected in its application. Construction must begin within one year under the Commission’s approval certificate. The applicant still must obtain

permits from the Department of Natural Resources.

Commission Approves Power Plant in Port Washington The Public Service Commission

approved the application of We Energies to construct approximately 1,090 megawatts of natural gas-fired electric generation at the Port Washington Power Plant site. The existing 320 megawatts of coal generation of the Port Washington site will be dismantled under the plan approved. The Commission also approved the connecting natural-gas lateral, to be constructed by We Energies, and the electric transmission infrastructure to be constructed by American Transmission Company.

The new electric generation proposed for Port Washington is part of We Energies’ “Power the Future” proposal, which also calls for new coal-fired electric generation to be constructed in the Oak Creek or Caledonia area. This portion of the proposal is currently under review.

In its verbal discussion, the Commission made the following findings:

• The electricity that would be generated under the proposal is needed to serve customer demand.

• The proposal by We Energies’ is preferable to those offered by the Midwest Independent Power Producers for its financial and environmental characteristics. We Energies’ proposal is financially sound and utilizes an existing brown field site.

• The leased generation arrangement is in the public interest and appropriately balances customers’ needs for a reliable electric system and the broader need to ensure that plants are constructed in a timely manner.


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Wisconsin Energy Corporation’s proposal calls for the dismantling of the existing coal plants, and the construction of two 545 MW natural gas plants to come on line in 2005 and 2008. W.E. Power will build and own the plants, and the utility affiliate, Wisconsin Electric Power, will operate the plant and obtain the electricity for its customers through a lease approved by the PSC. The written order is expected to be issued by the end of 2003.

Commission Approves Calpine Power Plant in Fond du Lac

The Public Service Commission approved the application of Calpine Corporation to construct a 523 megawatt natural gas-fired power plant in the town of Fond du Lac. The Commission approved construction of the Fond du Lac Energy Center at the Scott Road site, and said that Calpine must complete construction by May 2007.

As part of its application, Calpine received approval to construct roughly five miles of water supply pipeline, which it will dedicate to the city of Fond du Lac. Natural gas would be provided by a new, two-mile natural gas pipeline to be built by ANR. The natural gas pipeline would require construction authorization from the Federal Energy Regulatory Commission.

The new facility will be operated as a merchant plant and will sell electric power at wholesale market-based rates to investor-owned utilities and other purchasers for resale. At the PSC public hearing on the project in January 2003, Calpine stated that it had no power purchase agreements with public utilities for power generated by the plant.

The Commission reviewed the project application as it relates to safety, impact on reliability, environmental implications, and to ensure that the project does not

unreasonably interfere with local land use and development. The Commission also placed several mitigating conditions on the plant to address environmental concerns, including substantial measures to mitigate noise impacts.

El Paso Muskego Withdrawal of Power Plant Application On April 3, 2002, Muskego Energy

Center, LLC, (Muskego Energy) a subsidiary of the El Paso Corporation (El Paso) filed an application with the PSC for authority to build a 340 megawatt natural gas-fired power plant in Muskego, Wisconsin. Muskego Energy made subsequent application filings in August and November 2002. The Commission determined the application to be complete on December 20, 2002.

PSC and Department of Natural Resources (DNR) staff held a public information meeting on the project on January 8, 2003, in Muskego. The PSC and DNR issued a joint draft environmental impact statement on January 28, 2003. A prehearing conference was held in Madison on March 24, 2003.

El Paso notified the Commission on April 7, 2003, that it was withdrawing its application due to its inability to secure long-term power purchase agreements from regional utilities.

Incomplete Generation Applications

Power Ventures Group (PVG) filed an application to construct a 530 MW generating facility in Sheboygan County. The PSC determined this application to be incomplete in March 2003 and PVG has not re-filed as of July 1, 2003.


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Arpin Energy Center (AEC), an affiliate of Calpine Corporation, filed an application to construct a large generating facility and associated high voltage electric transmission, natural gas, and water facilities in Wood County. The PSC determined this application to be incomplete in October 2002 and AEC has not re-filed as of July 1, 2003.

Fox Energy Power Plant in Kaukauna

On November 8, 2002, the Public Service Commission issued to Fox Energy Company a Certificate of Public Convenience and Necessity (CPCN) for the construction and operation of a 635 MW natural-gas fired combined-cycle power plant in the town of Kaukauna in Outagamie County. The CPCN also permitted American Transmission Company to construct the transmission interconnection and power lines necessary for the operation of the power plant. Fox Energy Company, a wholesale merchant power plant developer, was a wholly-owned subsidiary of Mid-American Energy Holdings of Omaha, Nebraska. Fox Energy Company was required to begin the construction of the power plant within 24 months of issuance of the CPCN.

Effective April 25, 2003, Calpine Northbrook Energy, LLC (Calpine), a wholly owned subsidiary of Calpine Corporation, purchased Fox Energy Company. Fox Energy Company and Calpine filed a request dated July 21, 2003, that the Commission revise and modify the CPCN issued to Fox Energy Company to allow for several proposed changes, such as use of fuel oil as a secondary fuel, construction of fuel oil storage tanks, arrangement of the site layout, water treatment, and the manufacturer of the power plant equipment. Fox Energy Company and Calpine are also seeking air

permit modifications from the Department of Natural Resources. The Commission order is expected to be issued by October 2003.

Manitowoc Public Utilities Cogeneration Unit

Manitowoc Public Utilities (MPU) has requested authority to construct a new atmospheric pressure circulating fluidized bed (CFB) steam/electric cogeneration unit. MPU is proposing to build the new unit at its existing power plant in the city of Manitowoc. A draft EIS has been issued and hearings are expected to be held in the fall of 2003.

Madison Gas and Electric’s West Campus Cogeneration

Facility Madison Gas and Electric Company

(MGE); MGE Power LLC (MGE Power), a non-utility affiliate; and MGE Energy, Inc., a holding company, filed on June 14, 2002, a construction application with the Commission to build a large electric generating facility and associated high voltage transmission and natural gas interconnection facilities on the University of Wisconsin-Madison (UW) campus. The proposed project site is adjacent to and north of the existing UW West Campus Heating Plant located on the 500 block of Walnut Street in Madison on the UW campus.

The proposed West Campus Cogeneration Facility (WCCF) would be a combined-cycle electric generating facility capable of operating in a cogeneration facility mode. The facility would provide electric energy to MGE and steam and chilled water to the UW. The facility would be capable of providing 150 MW of electric power, 500,000 pounds per hour of steam, and 20,000 tons of chilled water. The


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primary fuel would be natural gas, with ultra-low sulfur distillate fuel serving as the back-up fuel. MGE Power would own the electric generation assets of the facility, while the state of Wisconsin would own the steam and chilled water assets. MGE would operate the facility.

MGE’s application was determined to be complete on October 21, 2002. The final Environmental Impact Statement was issued on June 2, 2003. Hearings will be held in July 2003 and it is expected the Commission will make its determination in September 2003.

Wisconsin Public Service Corporation’s Weston Unit 4

In September 2003, Wisconsin Public Service Corporation (WPSC) intends to file an application with the PSC for authority to construct a new 500 megawatt (MW) base-load supercritical pulverized coal electric generating unit at its existing Weston Power Plant site located south of Wausau, Wisconsin.

The new generator project will be called Weston Unit 4, and it would be located adjacent to the 360 MW Weston Unit 3, which began operating in 1981. Weston Unit 1, a 60 MW unit, and Weston Unit 2, a 90 MW unit, respectively built in 1954 and 1960, are also located on the 345-acre site.

If approved, the $750 million power plant would entail a four-year construction period, and could be operational as early as June 2008.

WPSC Declaratory Ruling The proceeding in docket 6690-DR-107

is to consider Wisconsin Public Service Corporation’s (WPSC) petition for a

declaratory ruling seeking the Commission’s declaration that it is prudent for the company to proceed with the development of the Weston 4 coal plant alternative through certification, and to incur up to $71 million in pre-certification expenses and pre-construction costs prior to the Commission granting certification, in order to ensure an adequate, reliable, and low-cost supply of energy for its customers towards the end of this decade. WPSC further requests authorization to include a current return on the pre-construction cost balance associated with Weston 4 beginning in 2004 at WPSC’s overall cost of capital.

The Commission issued a Notice of Proceeding; solicited comments on the issues presented in the petition and permitted interested persons to requested intervention and a contested case proceeding. The following filed requests to intervene: Citizens’ Utility Board (CUB), Wisconsin Industrial Energy Group (WIEG), Wisconsin Electric Power Company (WEPCO), Stora Enso North America (Stora Enso), Dairyland Power Cooperative (DPC), Wausau-Mosinee Paper Corporation (Wausau-Mosinee), Wisconsin Paper Council (WPC), Badger Power Marketing Cooperative (BPMA), Municipal Electric Utilities of Wisconsin (MEUW), LS Power Associates (LS Power), Renew Wisconsin (Renew), Great Lakes Utilities (GLU), Wisconsin Power and Light Company (WP&L) and Wisconsin Public Power Inc. (WPPI). All of the foregoing, with the exception of WEPCO, DPC, Renew, Stora Enso, MEUW and Wausau-Mosinee, filed comments along with their requests to intervene. CUB requested a contested case proceeding.

These issues are scheduled to come before the Commission in August 2003.


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Commission Issues Final EIS for the Elm Road Generating

Station The Public Service Commission and the

Department of Natural Resources have issued their joint final Environmental Impact Statement (EIS) for the Elm Road Generating Station proposed by We Energies in Oak Creek or Caledonia. We Energies is proposing to construct and place in operation 1,800 megawatts (MW) of coal-fired electric generation near its existing Oak Creek power plant.

The final EIS provides decision makers, the public and other stakeholders with an analysis of the economic, social, cultural, and environmental impacts that could result from the construction of a new power plant and its associated facilities.

The Elm Road Generating Station proposal includes one 600 MW integrated gas-fired combined-cycle plant and two 615 MW super critical pulverized coal plants. The proposal includes new coal-fire equipment, possible railroad modifications, construction of new cooling water intakes and discharge channels into Lake Michigan, and a breakwater.

The final EIS for this project provides analysis and information on the project costs and financing, the need for base load capacity in southeastern Wisconsin, alternatives to the proposed project, an overview of the proposed sites and technologies, air emissions, water resources, solid waste production and disposal, land resources, and other issues.

Technical hearings are scheduled for August 25-26, 2003 in docket 05-AE-118 and September 4-15, 2003 in docket 05-CE-130. Public hearings are scheduled for September 17, 2003, in Oak Creek and September 18 and 19, 2003, in Racine. Prefiled, written public testimony, in lieu of oral testimony, is being accepted from

August 25 through September 15, 2003, and at the public hearings.

Commission Amends Order in Chisago Transmission Line

Case The Commission approved an amended order for the Chisago Transmission line proposal. Xcel Energy and Dairyland Power Cooperative applied to construct a transmission line linking the Apple River substation in northwestern Wisconsin with the Chisago substation in eastern Minnesota. The PSC originally approved construction of the line in Wisconsin in 1999. The amended order incorporates project modifications that were negotiated with the applicants following a lawsuit brought by the cities of St. Croix Falls, Wisconsin, and Taylors Falls, Minnesota, against the PSC. The amended order incorporated a reduced voltage of the line and a reroute of the line through the city of St. Croix Falls. The applicants need to obtain additional permits from the state of Minnesota.

Arrowhead-Weston Transmission Line

In 2001, the Commission approved the request of the American Transmission Company, LLC and ATC Management, Inc. (collectively, “ATC”), to join Wisconsin Public Service Corporation (WPSC) and Minnesota Power (MP) as applicants in this docket. As part of this approval, the Commission declared that ATC was bound by all conditions, commitments, and agreements made by WPSC or MP in the course of the Commission proceedings. In the fall of 2001, the Commission issued its order in this docket authorizing WPSC, MP, and ATC to construct the Arrowhead-


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Weston project at an estimated cost of approximately $165.7 million. Construction of the project has not yet begun.

Subsequent to the Commission’s order, lawsuits were filed against the PSC in circuit court by the Citizen’s Utility Board (CUB), Clean Wisconsin (formerly Wisconsin’s Environmental Decade), and Save Our Unique Lands (SOUL). The lawsuit filed by CUB is still pending; however, those filed by Clean Wisconsin and SOUL were dismissed. SOUL subsequently filed a motion to intervene in CUB’s lawsuit, which was denied in circuit court. An appeal of that decision is now pending in the Wisconsin Court of Appeals.

Late in 2002, ATC filed a petition requesting that the Commission’s 2001 order authorizing the line be amended to include revised project costs, to clarify the effective date of the CPCN, and to allow ATC to construct a fiber-optic cable for the sole purpose of monitoring, operating and protecting the transmission grid. In spring 2003, the Commission reopened this proceeding to consider the multiple requests from ATC to modify the final decision. After soliciting the comments of the parties and other interested persons, the Commission ordered rehearing on a limited scope of issues, including the revised project cost, which increased to approximately $420.3 million.

Because of the large increase in ATC’s estimated project cost, the Commission selected RW Beck, Inc., to independently review the revised estimates for the Arrowhead-Weston transmission line project, as well as the estimates for the King-Weston alternative. RW Beck has submitted its final report to the Commission, which will be subject to scrutiny during hearings on the case, scheduled for fall 2003.

Formation of the Organization of Midwest States

During the past several years, there has been continuing discussion of the need to coordinate the activities of contiguous states in planning and siting transmission facilities.

In July 2002, the National Governors Association Task Force on Electricity Infrastructure, of which Commissioner Bie was a member, issued a report “Interstate Strategies for Transmission Planning.” This report recommended the formation of Multi-State Entities with the purpose of facilitating regional coordination of transmission planning and siting. Later that month, the Federal Energy Regulatory Commission (FERC) issued a Notice of Proposed Rulemaking on Standard Market Design. In the Notice of Proposed Rulemaking, FERC recognized this recommendation in the National Governors Association report and proposed the formation of Regional State Advisory Committees, which would have the responsibility of seeking regional solutions to electric utility issues that fall under federal and state jurisdiction. In April 2003, FERC issued a White Paper on the Wholesale Market Platform that contained further direction on the role of Regional State Advisory Committees in providing guidance to FERC on regional issues that involved shared jurisdiction.

In June 2003, the state regulatory commissions with jurisdiction over utility members of the Midwest ISO, including the PSC, formed the Organization of Midwest States. The objective of the Organization of Midwest States is to provide a means for these state commissions to act in concert in order to provide policy guidance to the Midwest ISO and FERC on issues such as pricing, market monitoring, and generation adequacy and to coordinate other activities of mutual interest.


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PSCW Involvement in FERC Issues

During the past two years, the Federal Energy Regulatory Commission (FERC) has continued to move forward with its policy of providing access to the nation’s network of transmission facilities and restructuring wholesale power markets. In 1996, FERC issued Order 888 that required transmission owning utilities to provide open access to their transmission systems. In 1999, FERC issued Order 2000 in which it required transmission owners to transfer control of their transmission facilities to independently-governed Regional Transmission Organizations.

In 2001, FERC opened a proceeding to examine the structure of wholesale electric markets. In July 2002, FERC issued a Notice of Proposed Rulemaking on Standard Market Design. The PSC actively participated in all phases of this proceeding. The Commission submitted several sets of formal comments on various policy issues under consideration by FERC, and individual Commissioners appeared before FERC and at industry-sponsored forums related to this proceeding. In April, 2003, FERC issued a White Paper that reflected further refinement and some retrenchment of the Standard Market design proposal. The Commission continues to be actively involved in this proceeding.

In 2002, FERC initiated two rulemaking proceedings with the goal of standardizing the interconnection of large generating facilities and small generating facilities to the transmission system or to distribution facilities. The PSC submitted comments to FERC in both of these proceedings.

Midwest ISO On February 1, 2002, the Midwest ISO

became operational. The Midwest ISO has the responsibility to provide transmission service over all of the transmission facilities in Wisconsin, except those owned by Dairyland Power Cooperative. The Midwest ISO also approves new generator interconnection requests, develops a regional transmission plan, and acts as the Security Coordinator for the Midwest ISO footprint.

In 2001, FERC ordered the Midwest ISO to develop a wholesale energy market based on a Locational Marginal Price (LMP) model. The development of the LMP market by the Midwest ISO has been controversial. The PSC has been an active participant in the development of the LMP market plan as part of the Midwest ISO’s stakeholder advisory process. The PSC has also participated in several other FERC proceedings relating to the membership of several Midwest utilities in the Pennsylvania, New Jersey, Maryland Interconnection (PJM) RTO and to the transmission rates that are applied to transactions that flow between the Midwest ISO and the PJM area.

Utility Refinancing The January 14, 2002 application of

Madison Gas and Electric marked the beginning of a cycle of large scale refinancing to take advantage of the lower long-term debt costs. Wisconsin Electric Power Company requested large scale refinancing authority in September 6, 2002. Utility applications for refinancing have continued into 2003.


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Transmission Dockets Below is a summary of transmission projects reviewed during the 2001-2003 biennial report period.

Description Date Filed Date Authorized

Authorized Cost

Transmission Projects Filed and Authorized Construct Forrest Junction Substation and Reconductor Transmission Line

07/20/01 11/20/01 $36,604,300

Transmission Improvements at Rockdale Substation 09/19/01 10/04/01 7,758,400West Towne to Fitchburg Transmission Reliability 10/03/01 11/07/01 20,377,000Rebuild Saukville to Granville Transmission Line 12/26/01 04/15/02 11,099,100Transmission Upgrades to Support Port Washington Power Plant

02/01/02 12/19/02 24,500,000

Rebuild Whitewater to Mukwonago Transmission Line

04/26/02 11/08/02 6,574,000

Upgrade Sauk County Transmission Line to 138 kV 07/17/02 11/08/02 22,686,000Construct Transmission Line to Rock River Power Plant

07/18/02 09/24/02 10,400,000

Reconductor Rock River to Janesville Transmission Line

09/20/02 01/16/03 6,826,000

Upgrade Transmission Facilities in Brown County 01/02/03 01/30/03 5,694,100Transmission Projects Currently Pending Construct Transmission Line From East Campus to Walnut Street

11/26/02

Upgrade Transmission Facilities in Dane County 12/23/02 Reconstruct Portage to Montello Transmission Line 05/01/03 Rhinelander Area Reliability Project 06/16/03

Electric Rate Cases -- Municipally-Owned Utilities Utility Docket Type of

Rate Case 1 Dollars

Requested Dollars Granted

Final Order

PercentChange

Argyle 0230-ER-104 $ 22,653 $ 39,026 06/26/02 9.37 Barron 0380-ER-102 Power Cost

Adjustment Change for Cp-3

NA 423,874 10/18/01 NA

Barron 0380-ER-103 310,646 76,468 12/21/01 1.80 Cashton 0970-ER-102 116,292 116,298 04/14/03 27.58 Cuba City 1470-ER-102 112,750 108,325 01/08/03 8.18 Cumberland 1490-ER-101 289,693 331,890 08/14/02 15.70 Eagle River 1710-ER-103 113,205 $108,898 12/02/02 5.54 Fennimore 1980-ER-104 83,216 71,912 10/05/01 4.10 Gresham 2400-ER-102 167,966 165,546 03/06/03 12.60 Hustisford 2650-ER-104 114,142 114,147 08/16/02 8.60 Jefferson 2750-ER-104 (18,135) (128,685) 11/20/01 -1.51


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Utility Docket Type of Rate Case 1

Dollars Requested

Dollars Granted

Final Order

PercentChange

Kaukauna 2800-ER-101 2,100,273 1,954,753 05/06/03 6.60 Kiel 2850-ER-103 127,841 75,157 01/14/02 1.90 Lake Mills 3000-ER-102 121,487 148,883 11/06/02 3.70 Manitowoc 3320-ER-106 1,770,114 1,804,238 01/03/02 6.14 Menasha 3560-ER-103 242,178 56,510 05/08/03 0.20 Mount Horeb 3930-ER-103 77,600 66,730 05/23/03 2.10 Muscoda 4000-ER-102 (8,797) (4,827) 09/28/01 -0.28 New Glarus 4100-ER-103 86,413 78,064 12/11/02 5.80 New London 4130-ER-105 195,316 210,240 12/27/02 2.20 New Richmond 4139-ER-104 270,680 265,466 01/02/02 6.42 Oconto Falls 4360-ER-105 56,862 71,352 04/19/02 3.00 Prairie du Sac 4830-ER-102 107,220 107,224 01/06/03 4.45 Reedsburg 4970-ER-103 475,437 428,197 03/28/02 3.56 Richland Center 5070-ER-103 34,900 20,110 12/10/02 0.40 River Falls 5110-ER-103 592,793 573,163 10/08/01 9.10 Sauk City 5260-ER-103 145,400 152,253 06/12/02 7.40 Shawano 5350-ER-104 310,978 70,046 08/28/02 0.60 Shullsburg 5460-ER-101 46,200 42,012 03/08/02 6.60 Trempealeau 5940-ER-103 50,117 47,929 09/03/02 6.40 Two Rivers 5990-ER-103 419,391 422,164 03/17/03 7.90 Waterloo 6220-ER-103 340,155 300,046 06/06/02 8.10 Waupun 6290-ER-105 237,350 207,127 03/21/03 3.40 Wisconsin Dells 6610-ER-101 225,303 172,527 01/09/03 5.20 Wisconsin Rapids 6700-ER-102 426,562 398,773 04/26/02 2.70 Wonewoc 6760-ER-102 33,706 33,706 10/02/02 11.61

Note1 All cases listed above are full electric rate cases if not otherwise specified.


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Electric Rate Cases – Investor – Owned Utilities Utility Docket Type of Rate Case

* Dollars

Requested Dollars Granted

Final Order

Percent Change

DLP 1510-ER-103 $ 569,418 $ 542,198 05-23-03 6.63

MGE 3270-UR-110 Limited Re-opener Fuel 12,061,000 11,177,000 12-19-01 5.70

MGE 3270-UR-111 14,563,000 20,319,000 02-28-03 9.06 NSP 4220-UR-111 Fuel Increase 12,047,890 11,329,252 10-18-01 NA SWLP 5820-UR-107 24,100,052 24,042,281 09-12-01 NA WEPCO 6630-UR-111 Interim - Fuel 55,067,000 55,067,000 03-14-03 NA WP&L 6680-UR-111 Interim Decision 105,100,000 34,260,000 04-24-02 5.84 WP&L 6680-UR-111 105,100,000 60,145,000 09-13-02 10.26 WP&L 6680-UR-110 Fuel Re-opener 57,757,000 06-5-03 NA WPSC 6690-UR-113 Interim Decision 86,800,000 55,467,000 12-19-01 10.30 WPSC 6690-UR-113 86,800,000 58,603,000 06-21-02 10.90 WPSC 6690-UR-114 50,700,000 21,378,000 03-20-03 3.50 DLP: Dahlberg Light and Power Company MGE: Madison Gas and Electric Company NSP: Northern States Power Company (d/b/a Xcel Energy) SWLP: Superior Water, Light and Power Company WEPCO: Wisconsin Electric Power Company WP&L: Wisconsin Power and Light Company (d/b/a Alliant Energy) WPSC: Wisconsin Public Service Corporation


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NATURAL GAS DIVISION

Interstate Pipelines Natural gas supplies are transported

over interstate pipelines to the local utilities. The federal regulation of these interstate pipelines focuses on providing users with competitive choices, an approach that assumes most system users have access to more than one pipeline. This has not been the case for most Wisconsin customers; many portions of the state have had access to only one interstate pipeline. In addition, this existing pipeline capacity continues to be constrained in some areas of the state, particularly in western Wisconsin, where incremental capacity is available only at premium rates. During this biennium, major developments have occurred that increases access to competitive pipeline options and services.

Guardian Pipeline is a new interstate pipeline that started service in December 2002. Guardian transports natural gas into southeastern Wisconsin from the Joliet, Illinois, area. A number of large interstate pipelines converge in the Joliet area, which is often referred to as the Chicago Hub. The Chicago Hub has become an active market for natural gas supplies. Wisconsin utilities are increasing the amount of gas supplies purchased at the Chicago Hub, rather than from the actual producing areas (such as the Gulf of Mexico, Oklahoma, and western Canada).

Guardian represents a substantial addition to the pipeline capacity serving southeastern Wisconsin and brings additional competition to the natural gas transportation services available in this part of the state.

Wisconsin Gas Company (WGC) and Wisconsin Electric Power Company

(WEPCO) are making major connections to the Guardian pipeline. During the biennium, WGC started construction on a large lateral pipeline connecting Guardian to WGC’s distribution system in the greater Milwaukee area. WEPCO also made smaller connections between Guardian and WEPCO’s gas distribution systems at two Walworth County locations near Walworth and Whitewater, and in Jefferson County near Ixonia.

On a smaller scale, WGC and Northern States Power Company (NSP) built connecting gas lines to tie certain service areas in northwestern Wisconsin to an additional interstate pipeline system. These areas were previously connected only to Northern Natural Gas Company’s (Northern) interstate pipeline system. The new supply line connections allow gas shipments on a pipeline owned by Viking Gas Transmission Company (Viking).

One of the new gas lines WGC built to connect with Viking also serves as an intrastate pipeline. Three gas utilities, NSP, St. Croix Valley Gas Company, and Midwest Natural Gas Company, make use of this new WGC intrastate pipeline to provide additional gas supplies to service areas previously served only by Northern. The three gas companies can now deliver gas supplies transported on Viking into the WGC intrastate pipeline, which in turn delivers the gas supplies to the three utilities.

Natural Gas Prices Natural gas continues to increase in

importance to the economy of Wisconsin. More than two thirds of the homes in Wisconsin now use natural gas for heating. It is used in numerous industrial processes


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and is playing an increasing role as a fuel for electric generation.

The prices for the services necessary to transport and distribute natural gas are regulated at either the federal or state level. The price of natural gas itself is unregulated. It is established in an open, national market, reflecting both demand and supply.

Prices for natural gas were volatile during the 2001-03 biennium. The winter of 2000-01 had seen a substantial run-up in gas costs mid-winter, to levels not previously seen. The prices fell during the next several months and the winter of 2001-02 saw a return to prices more in line with or lower than their historical antecedents. The winter of 2002-03 saw another rapid rise in prices, reaching historical highs in February and March. Prices fell during the second quarter of 2003, but at a much slower rate and settled at levels substantially higher than previously seen.

Fixed rates/fixed bills Two utilities initiated pilot programs in

response to the continuing volatility in the gas markets. Madison Gas and Electric Company (MGE) began offering a fixed-rate program during the winter of 2001-02. Alliant/Wisconsin Power & Light Company (WP&L) began offering a fixed-bill program during the winter of 2002-03. The programs are designed to mitigate the impact of market price volatility. They do not guarantee customers a lower price than they would otherwise pay.

MGE’s pilot program (reviewed and approved in dockets 3270-GR-102 and 3270-GR-103) was offered to residential customers in its Viroqua service territory, and small and medium commercial customers throughout its service territory. The program provided customers the ability to “fix” the rate that they pay for their natural gas supplies during the winter

heating months. To do this MGE estimates customer demand for the service and purchases dedicated supplies to meet this demand. The rate charged to customers during the winter heating season reflects the cost of this gas supply.

WP&L’s pilot program (reviewed and approved in docket 6680-GR-100) was offered to residential and small and medium sized commercial customers throughout its service territory. Enrollment was capped for both customer groups to allow the company to gain experience with the program and later determine if it would be offered on an expanded basis. The program provided customers the ability to fix the monthly amount that they would pay for natural gas services throughout the year regardless of weather variations. The bill amount is customized to reflect the individual customer’s weather-normalized consumption history and expected weather variation. The concept is similar to budget billing plans offered by the utilities to their customers with one important exception: there is no true-up. The customer’s bill is not adjusted to reflect either increases or decreases in the cost of gas over the course of the program, nor is it adjusted for increases or decreases in usage due to weather variations.

Gas Only Rate Cases Two gas-only rate cases were processed

during this biennium. These were for two of the small gas-only utilities in the state, St. Croix Valley Natural Gas Company, which serves areas near the Wisconsin/Minnesota border near the Twin Cities, and City Gas Company, that serves customers in the Antigo area.

City Gas: Docket 1140-GR-105

Decision issued 12/19/02


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Requested Increase: $622,827 (12.97% increase)

Authorized Increase: $835,021 (7.4% increase)

St. Croix Valley Natural Gas: Docket 5230-GR-103

Decision Issued 10/17/01

Requested Increase: $201,900 (3.88% increase)

Authorized Increase: $227,065 (3.62% increase)

Natural Gas Supply Plans As discussed elsewhere in this report,

natural gas costs experienced increased volatility during the 2001-03 biennium. This raised interest in what steps the utilities take to lessen the impact of these swings on their customers and concerns regarding the availability of supplies to Wisconsin’s residents.

Wisconsin’s natural gas utilities are required to file annual gas supply plans.

These are reviewed and approved by the Commission. The Commission review is to

ensure that Wisconsin’s natural gas utilities are pursuing reasonable purchasing strategies for obtaining natural gas supplies, and that they have adequate capacity and supply under contract to meet the needs of their customers. Many of the utilities pursue strategies using some of the financial instruments that are available to lay off some of this risk, such as hedges. These strategies, though not individual actions, are also reviewed and approved by the Commission.

Natural Gas Construction Orders

During the last biennium, the Commission issued 33 orders in gas construction cases (not including minor amended orders or procedural orders). This is similar to the previous biennium’s 31 gas construction orders. Many of the projects are related to reinforcing existing gas distribution systems and connecting to additional interstate pipeline systems (discussed earlier). Three gas line projects are designed to deliver gas to new power plants. In the past, construction projects to provide service to new areas were more prevalent.

Natural Gas Construction Projects

Utility Docket Final Order Description

MGE 3270-CG-117 November 2001 Install Automatic Meter Reading System MNG 3670-CG-114 December 2001 Approved second supply source (WGC and Viking)

in St. Croix County and denied request to allow provision of service in portions of the town of Kinnickinnic, St. Croix County

MNG 3670-CG-115 September 2002 Provide service in portions of town of Barre, La Crosse County

NSP 4220-CG-130 December 2001 Additional supply source (WGC and Viking) in St. Croix County and allows provision of service in portions of town of Kinnickinnic, St. Croix County


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Utility Docket Final Order Description

NSP 4220-CG-131 December 2001 Denied request to allow provision of service in portions of town of Warren, St. Croix County

NSP 4220-CG-132 September 2002 Provide service in portions of the town of Barre, La Crosse County

NSP 4220-CG-134 February 2002 Additional supply source (Viking) in St. Croix and Polk Counties

SCV 5230-CG-102 December 2001 Provide service in portions of town of Kinnickinnic, St. Croix County

SCV 5230-CG-104 July 2001 Additional supply source (WGC and Viking) in St. Croix County

WEPCO 6630-CG-115 July 2001 System reinforcement in city of Franklin, Milwaukee County

WEPCO 6630-CG-117 September 2002 Install Automatic Meter Reading System WEPCO 6630-CG-118 June 2002 Additional supply source (Guardian) in Jefferson

County WEPCO 6630-CG-119 July 2002 Additional supply source (Guardian) in Walworth

County NSP 4220-CG-134 Feb. 2002 Additional supply source (Viking) in St. Croix and

Polk Counties SCV 5230-CG-102 Dec. 2001 Provide service in portions of town of

Kinnickinnic, St. Croix County SCV 5230-CG-104 July 2001 Additional supply source (WGC and Viking) in St.

Croix County WEPCO 6630-CG-115 July 2001 System reinforcement in city of Franklin,

Milwaukee County WEPCO 6630-CG-117 September 2002 Install Automatic Meter Reading System WEPCO 6630-CG-118 June 2002 Additional supply source (Guardian) in Jefferson


County NSP 4220-CG-134 February 2002 Additional supply source (Viking) in St. Croix and

Polk Counties SCV 5230-CG-102 December 2001 Provide service in portions of town of

Kinnickinnic, St. Croix County SCV 5230-CG-104 July 2001 Additional supply source (WGC and Viking) in St.

Croix County WEPCO 6630-CG-115 July 2001 System reinforcement in city of Franklin,

Milwaukee County WEPCO 6630-CG-117 September 2002 Install Automatic Meter Reading System WEPCO 6630-CG-118 June 2002 Additional supply source (Guardian) in Jefferson


County WPSC 6690-CG-148 April 2003 Install Automatic Meter Reading System


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WPSC 6690-CG-149 August 2002 Provide service to new power plant in Brown County

WEPCO and WGC

05-CG-101 July 2002 Additional supply source (Guardian) in Walworth County

WEPCO and WGC

05-CG-102 December 2002 Install interconnections between WEPCO and WGC in city of New Berlin, Waukesha County, in town of Erin, Washington County, and in town of Merton, Waukesha County

MGE: Madison Gas and Electric Company MNG: Midwest Natural Gas Company NSP : Northern States Power Company SCV: St. Croix Valley Natural Gas Company WEPCO: Wisconsin Electric Power Company WF&L: Wisconsin Fuel and Light Company (subsequently acquired by WPSC) WGC: Wisconsin Gas Company WP&L: Wisconsin Power and Light Company WPSC: Wisconsin Public Service Corporation Guardian: Guardian Pipeline LLC (interstate pipeline) Northern: Northern Natural Gas Company (interstate pipeline) Viking: Viking Gas Transmission Company (interstate pipeline)


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WATER, COMPLIANCE AND CONSUMER AFFAIRS

Uniform System of Accounts Municipal Utilities

The Commission is evaluating and updating the Uniform System of Accounts (USOA) for regulated municipal utilities. The project was initiated in the last biennium, but has been on hold awaiting the outcome of accounting questions stemming from an important decision of the Commission concerning the accounting treatment for contributions in aid of construction. The current intent is to simplify and consolidate all the municipal systems of accounts into one, using summary accounting to accommodate the less detailed reporting of the smaller Class D utilities.

Accounting Treatment for Contributions in Aid of

Construction Municipal Utilities – Docket

05-US-105 The Commission, on its own motion, opened this landmark docket to determine if the present accounting and ratemaking for municipal Account 271, Contributions in Aid of Construction (CIAC), was adequate or whether modifications would improve on the present accounting and ratemaking treatment. An order was issued on April 2, 2001, establishing new accounting treatment for CIAC. The new treatment became effective on January 1, 2003. Now in the implementation period, additional CIAC-related accounting issues are being discussed and will soon be before the Commission for decision.

Public Fire Protection - Rate Filings

As local governments face increasing costs with declining dollars, water utilities are impacted. Specifically, impacted is the method used to recover the cost of providing public fire protection (PFP) in many communities. At present, there are 594 water utilities operating in the state. Using statutory authority granted in 1988, 124 of the 594 systems have developed and received Commission approval to stop charging the PFP municipal rate and instead recover it directly from ratepayers and other benefiting residents. In the last biennium more municipalities began charging ratepayers. In the future, more municipal governing bodies will be opting to direct charge PFP.

Benchmarks 2003 More and more water utility managers

are comparing their operations with others to measure their own efficiency. To assist in this effort, 2003 water utility benchmarks were developed based upon the utilities’ filed 2002 annual reports. These benchmarks are online for use at the Commission’s website. Simply log onto http://www.psc.state.wi.us, click on the "Water" tab, go to "Industry News and Information," and select "Water Utility Statistical Benchmarks". An individualized report of specific utility benchmarks is available via e-mail at no charge.

Simplified Rate Cases A Statutory provision adopted in 1995

allows for inflationary rate increases without


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hearing for qualifying municipal water and sewer utilities. In this recent biennium, municipal utilities continued to expand their use of this convenient tool. In the two-year period, applications were filed by 144 utilities.

Water Rate Cases During this biennium, 161 water and

sewer cases were filed. These cases were all filed electronically and processed using the Commission's automated municipal water and sewer rate case processing procedures. See table for listing.

Consumer Rules The Commission is in the process of

revising the consumer protection portion of Chapter PSC 165 which regulates certain telecommunications providers. Changes are being made to regulations in areas such as: application for service, customer billing, information available to customers, deposits, deferred payment agreements, service restrictions, disconnection of service, customer complaints, and dispute procedures.

The proposed rule with revisions would apply to providers such as ILECs, CLECs,

and resellers. The Commission has worked closely with representatives from the telecommunications industry, community groups, and other state agencies in preparing these revisions and creating several new sections of the rule.

A public hearing on the proposed rule was held on July 30 and 31, 2002, and the proposed rules were then sent out for comment. An extension of the original deadline for filing written comments was granted, establishing a new deadline of September 23, 2002. Approximately 800 oral and written comments were received from telecommunications providers and interested parties. Each comment was discussed and considered, and the rule was redrafted based on those comments.

A large number of proposed changes were made to the draft that had been sent for hearing. As a result, at its open meeting of July 24, 2003, the Commission decided to request comments concerning the proposed changes made during the redrafting process. Written comments were due on September 25, 2003.

The Commission intends to submit the proposed rule to the legislature in 2004.

Water and Sewer Rate Orders July 1, 2001, to June 30, 2003

Docket # Utility Name Order Issued

Increase Requested

Increase Granted

Overall % Increase

0010-WR-103 Abbotsford Municipal Water 04/29/2003 $ 163,957 $ 161,472 31 0020-WR-102 Adams Water 11/01/2002 105,648 105,430 35 0050-WR-104 Algoma Water 10/08/2001 361,884 259,823 56 0190-WR-109 Appleton Water Department 09/03/2002 2,764,337 2,977,266 25 0260-WR-101 Athens Water 11/01/2002 63,328 73,278 48 0360-WR-101 Baraboo Water 11/18/2002 311,216 312,913 34 0385-WR-102 Bayfield Water 10/30/2001 39,852 39,852 25 0440-WR-102 Belmont Municipal Water & Sewer 02/13/2003 34,463 43,665 31


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Increase Requested

Increase Granted

Overall % Increase

0560-WR-101 Blair Municipal Water 04/19/2002 43,312 33,061 18 0615-WR-102 Blue Mounds Water 07/06/2001 45,728 47,697 49 0630-WR-102 Bonduel Water 10/31/2001 99,694 106,785 79 0710-WR-105 Brillion Municipal Water 11/21/2002 0 0 PFP 0720-WR-102 Bristol Water 02/14/2002 58,044 11,968 5 0750-WR-101 Brokaw Water 12/05/2002 205,937 109,281 80 0760-WR-103 Brookfield Municipal Water 02/12/2003 504,324 142,456 4 0770-WR-103 Brooklyn Water 11/7/2002 29,087 37,878 22 0780-WR-103 Brown Deer Water 03/19/2003 0 0 PFP 0860-WR-106 Butler Water 11/15/2002 106,853 115,453 32 0920-WR-101 Cambridge Water 10/16/2001 53,784 112,094 71 0980-UR-101 Cassville Sewer 10/18/2002 24,560 28,988 22 0980-UR-101 Cassville Water 10/18/2002 45,898 44,212 46 1000-WR-103 Cedarburg Water 12/11/2001 109,598 103,244 8 1120-WR-103 Chippewa Falls Dept Of Public

Utilities 06/12/2002 0 0 PFP

1150-WR-102 Clayton Municipal Water 10/11/2002 16,104 16,105 20 1190-WR-103 Clinton Water 10/24/2002 96,988 109,692 37 1200-WR-104 Clintonville Water & Electric 12/27/2002 0 0 PFP 1370-WR-102 Cornell Water 03/12/2003 15,922 13,442 6 1470-WR-101 Cuba City Water 10/02/2002 179,888 167,609 105 1490-WR-102 Cumberland Municipal 10/09/2002 38,516 40,409 17 1620-WR-103 Dickeyville Water 09/05/2002 82,690 88,421 104 1670-WR-101 Dousman Water 09/21/2001 104,381 102,447 69 1685-WR-102 Drummond Sanitary District #1

Water 09/05/2001 11,924 12,321 24

1710-WR-106 Eagle River Light & Water Commission

06/07/2002 0 0 PFP

1710-WR-105 Eagle River Light & Water Commission

03/28/2002 0 0 PFP

2010-WR-107 Fond Du Lac Water 03/08/2002 373,725 373,725 8 2020-WR-104 Fontana Municipal Water 04/08/2003 117,103 123,753 17 2040-WR-102 Footville Water 03/29/2002 63,558 62,557 69 2090-WR-106 Fox Point Water 09/20/2002 76,671 76,671 8 2160-WR-102 Galesville City of Municipal Water

and Sewer Utility 05/13/2002 87,346 88,707 41

2200-WR-101 Genoa City Water 70/10/2002 402,188 414,839 144 2230-WR-101 Gilman Water 01/16/2002 68,802 68,154 127 2300-WR-103 Grafton Water & Wastewater

Commission 02/11/2003 157,590 187,238 18

2310-WR-101 Grand Chute Sanitary District #1 Water

12/11/2001 1,044,141 902,679 50

2320-WR-101 Granton Municipal Water 03/14/2003 89,199 25,495 52 2470-WR-103 Hartford City of Utilities 10/14/2002 0 0 PFP 2500-WR-100 Hayward City of Waterworks &

Sewer 03/25/2002 0 0 PFP

2500-UR-102 Hayward Sewer 10/05/2001 91,050 97,645 36 2500-UR-102 Hayward Water 10/05/2001 37,545 863,880 33


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Increase Requested

Increase Granted

Overall % Increase

2550-WR-104 Hillsboro Water 12/16/2002 45,565 50,192 25 2600-WR-103 Horicon Water 11/15/2002 62,787 34,696 7/23 2650-WR-102 Hustisford Utilities 03/03/2003 45,287 24,070 8 2690-WR-100 Iron Ridge Municipal Water 05/16/2003 57,038 61,258 66 2700-WR-101 Iron River Sanitary District No 1 07/17/2002 82,760 82,295 114 2790-UR-100 Juneau Water 02/11/2003 89,154 85,316 20 2830-WR-104 Kewaskum Municipal Water 10/07/2002 107,626 88,951 24 2870-WR-102 Kimberly Water 10/22/2002 56,597 56,597 14 W-1 2920-WR-103 La Crosse Water 02/18/2002 1,043,282 1,006,661 27 3000-WR-103 Lake Mills Light & Water 09/05/2002 0 0 PFP 3040-WR-101 Land O’Lakes Sanitary District No 1 12/18/2002 109,823 39,139 106/18

2 3160-WR-103 Lodi Water & Light 06/05/2002 0 0 PFP 3210-WR-101 Loyal Water 11/12/2001 18,500 26,826 23 3280-WR-107 Madison Water 08/26/2002 2,206,528 1,577,363 11 3340-WR-102 Maple Bluff Water 08/02/2001 21,114 21,114 16 3350-WR-102 Marathon Village of Water & Sewer 02/08/2002 0 (185,682) (42) 3370-WR-102 Marinette Municipal Water 09/19/2002 892,934 926,421 46 3460-WR-102 Mayville Water 11/15/2002 249,465 236,411 31 3480-WR-103 Mazomanie Water 01/10/2003 107,163 107,906 63 3590-WR-104 Menomonie City of Water

Department 06/13/2002 0 0 PFP

3590-WR-103 Menomonie Water 10/18/2001 314,485 245,965 19 3680-WR-102 Milltown Water 03/28/2003 30,444 35,079 43 3720-WR-104 Milwaukee Water 02/15/2002 7,393,707 6,361,972 10 3740-WR-101 Mineral Point Municipal Water 02/26/2003 58,539 77,097 33 3830-WR-102 Montello Water 03/14/2002 38,528 39,362 30 4000-WR-103 Muscoda Water 03/19/2003 24,710 30,564 19 4005-WR-102 Muskego Water Public 03/19/2003 207,293 167,960 16 4020-WR-102 Necedah Water 10/05/2001 38,634 45,486 34 4090-WR-101 New Berlin Water 11/20/2001 767,181 432,915 14 4100-WR-105 New Glarus Water 12/21/2001 43,350 43,988 14 4110-WR-102 New Holstein Water 08/21/2001 214,860 115,921 32 4120-WR-102 New Lisbon Water 11/14/2002 71,513 84,981 48 4130-WR-104 New London Electric & Water 04/02/2002 427,312 455,250 37 4225-WR-101 Northfield Sanitary District # 1 12/16/2002 0 0 PFP 4225-WR-100 Northfield Sanitary District #1

Water 12/14/2001 0 0 N/A

4310-WR-101 Oak Creek Water & Sewer 02/13/2003 0 0 PFP 4330-WR-103 Oakfield Village of Municipal Water 09/19/2002 241,444 70,045 42 4340-WR-103 Oconomowoc Water 11/15/2002 154,102 158,913 13 4430-WR-102 Oostburg Municipal Water 02/17/2003 109,365 110,993 38 4440-WR-101 Oregon Municipal Water & Sewer 07/10/2002 0 0 PFP 4440-WR-100 Oregon Water 08/27/2001 332,071 317,125 57 4460-WR-104 Osceola Water 01/16/2002 113,422 149,410 48 4480-WR-106 Oshkosh Water 08/02/2001 1,138,890 1,074,753 12


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Increase Requested

Increase Granted

Overall % Increase

4510-WR-102 Paddock Lake Municipal Water 06/27/2003 4,725 4,725 10 4520-WR-101 Palmyra Water & Sewer 09/09/2002 86,490 86,490 38 4570-WR-101 Pence Water 09/19/2002 35,444 29,180 345 4625-WR-101 Pewaukee Water 10/08/2001 521,944 511,551 62 4700-UR-103 Platteville Sewer 10/18/2002 72,095 0 0 4700-UR-103 Platteville Water 10/18/2002 72,858 38,739 3.00 4730-WR-102 Pleasant Prairie Water 12/19/2002 0 0 PFP 4737-WR-102 Plover Water 09/06/2001 296,226 296,226 19 4780-WR-104 Port Washington Water 12/20/2001 0 0 PFP 4810-WR-101 Poynette Municipal Water 11/12/2002 35,637 43,537 20 4900-WR-106 Racine Water Works Commission 03/28/2003 920,745 916,592 7 4900-WR-105 Racine Water Works Commission 04/05/2002 685,360 787,227 6.64 4920-WR-101 Randolph Municipal Water 08/27/2001 124,945 127,777 101 4970-WR-102 Reedsburg Water 01/02/2002 355,644 276,869 36 4990-WR-102 Reeseville Water 08/21/2001 71,715 76,584 111 5010-WR-104 Rhinelander Water 03/07/2002 63,064 63,064 6 5050-WR-102 Rice Lake Water 08/21/2001 71,720 71,720 10 5160-WR-104 Rome Water Ltd 05/09/2002 96,104 99,544 42 5360-WR-101 Shawano Lake Sanitary District 1 12/19/2002 0 0 PFP 5350-SR-104 Shawano Municipal Utilities 10/22/2002 99,204 57,337 4 5350-WR-103 Shawano Municipal Utilities 06/19/2002 316,988 378,390 48 5380-WR-101 Sheboygan Falls Utilities 09/20/2002 291,770 285,388 36 5390-WR-102 Shelby Sanitary District #2 Water 11/21/2002 17,906 20,199 20 5450-WR-103 Shorewood Hills Water 11/05/2002 29,765 18,534 8 5440-WR-106 Shorewood Municipal Water 05/14/2003 71,284 77,334 9 5480-WR-101 Siren Water 02/08/2002 87,290 86,614 98 5545-WR-102 Somers Water 09/26/2002 65,307 53,550 14 5590-WR-104 South Milwaukee Water 11/15/2002 216,667 214,131 12 5190-WR-101 St Cloud Water & Sewer 08/13/2002 0 0 PFP 5690-WR-104 Stevens Point Water 10/18/2002 286,801 300,363 12 5750-WR-102 Stoughton Water 12/06/2001 173,902 152,232 15 5820-UR-107 Superior Water, Light, & Power 09/11/2001 1,437,801 1,059,466 33 5820-WR-100 Superior Water, Light, & Power 12/16/2002 0 0 PFP 5835-WR-102 Sussex Water 10/16/2002 213,696 198,258 18 5880-UR-103 Thorp Sewer 11/25/2002 92,029 76,008 41 5880-UR-103 Thorp Water 11/25/2002 22,677 88,787 41 5940-WR-101 Trempealeau Municipal Electric &

Water 06/19/2002 32,583 26,301 22

6060-WR-102 Valders Water 08/30/2001 58,003 36,607 36/57 6185-WR-101 Warrens Water 03/20/2003 108,169 3,475 12 6190-WR-100 Washburn Municipal Water &

Sewer 09/03/2002 62,570 63,906 39

6230-WR-105 Watertown Water Commission 05/30/2003 457,989 498,567 17 6240-WR-103 Waukesha Water 11/08/2001 545,266 543,062 10 6260-WR-103 Waunakee Water 12/12/2002 0 0 PFP 6260-WR-102 Waunakee Water 03/25/2002 251,161 223,591 29


29


Increase Requested

Increase Granted

Overall % Increase

6270-WR-101 Waunona Sanitary District #2 09/27/2002 47,170 43,375 83 6290-WR-104 Waupun Water 12/13/2002 0 0 PFP 6290-WR-103 Waupun Water 12/21/2001 395,615 356,514 28 6310-WR-103 Wausaukee Water 07/10/2001 60,888 44,377 37 6380-WR-109 West Bend Water 01/08/2003 0 0 PFP 6380-WR-108 West Bend Water 05/30/2002 0 0 PFP 6480-WR-103 Whitefish Bay Water 03/12/2002 172,984 180,199 21 6650-WR-101 Wisconsin Gas Company Water 06/18/2002 153,699 153,699 9 6760-WR-101 Wonewoc Water & Electric 06/26/2002 39,615 54,558 70 6680-UR-111 WP&L - Beloit 09/13/2002 1,600,000 706,000 19 6680-UR-111 WP&L - Ripon 09/13/2002 332,000 76,000 8 6680-UR-112 WP&L-Beloit 04/04/2003 605,000 269,000 6 6680-UR-112 WP&L-Ripon 04/04/2003 137,000 100,000 10 6810-WR-102 Wrightstown Sanitary District 1 06/05/2003 15,291 16,458 39 6800-WR-102 Wrightstown Water 11/20/2001 140,206 146,984 79 6820-WR-101 Yuba Water 05/05/2003 (869) 1,829 29 Notes

(A) Also revised electric LPC (B) Step I amounts shown, Step II granted = $67,359, request not broken into 2 steps (C) Step I amounts shown, Step II requested = $143,770, Step II granted = $107,291 (D) Amount not specified in request (E) Step I amounts shown, Step II requested = $65,896, Step II granted = $587,476


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TELECOMMUNICATIONS DIVISION

Competitors Increase Market Share

The Public Service Commission of Wisconsin published a report in June 2003 on the status of competition in the state. Competitive local exchange companies (CLECs) have increased their share of voice-grade local lines in Wisconsin from 6 percent in 2000 to 12.4 percent in June 2002. In the market for the more lucrative business lines, the CLEC share was 24 percent in June 2002. For residential lines, the largest CLEC penetration has occurred in the Fox Valley, followed by Milwaukee and Madison. CLECs in the Fox Valley and Madison are primarily using unbundled loops with their own switching, while in Milwaukee there has been a large increase in the CLEC use of the platform of unbundled loops, switching and transport (UNE-P) to serve residential customers during 2002.

For voice-grade business lines, CLECs initially concentrated on the Milwaukee metro market, both through leasing loops from the incumbent local exchange company (ILEC) and using their own loops. By June 2002, CLECs served a significant share of the business lines throughout eastern Wisconsin. In the exchanges served by SBC, competitive providers served 10.3 percent of the residential lines and 32.4 percent of the voice-grade business lines, i.e., 18 percent of the total market.

The most striking trend in local telecommunications is the decline in the number of lines and the accompanying basic local service revenues for the ILECs in Wisconsin. This trend started with a slow down in the rate of growth in 2000, followed with declines in the number of lines and in revenues from basic local service in 2001. While the growth in the overall market for

wireline voice services is slowing, revenues from special access and data circuits have continued to show robust growth. For wireless companies, the number of wireless subscribers has increased from 1,698,520 at the end of 2000 to 2,522,479 as of June 30, 2002, which is 68 percent of the total number of voice-grade lines provided by ILECs and CLECs in Wisconsin.

Broadband lines provided by competitive providers increased dramatically in the past two years, going from 58,988 the end of 2000 to 222,763 in June 2002. Cable television companies (CATV) dominate the residential broadband market, while telephone companies lead in the much smaller business market. Overall, cable modems are used for over 80 percent of the broadband lines provided by competitive providers. This percentage has increased even as telephone companies have placed a greater emphasis on selling high speed digital subscriber lines (DSL).

Many ILECs use CLEC subsidiaries to provide broadband services, and those lines are included with the CLEC numbers in this report. There are enough problems with the way broadband lines are counted in the annual reports filed with the Public Service Commission of Wisconsin that the broadband lines ILECs provide directly to end users have not been included in this report. If ILEC lines were included in the broadband totals, the cable modem share of the broadband market in Wisconsin would drop to between 70 and 75 percent.

SBC Wisconsin Unbundled Network Elements

Competitive Local Exchange Carriers, or CLECs, lease portions of SBC


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Wisconsin’s network that SBC is required to provide on an unbundled basis. These pieces of the network are referred to as unbundled network elements, or UNEs. According to Federal Communications Commission (FCC) pricing rules, UNEs are required to be priced based on total element forward-looking long-run incremental costs (TELRIC).

The Commission completed its determination of cost study methods that are TELRIC compliant for SBC Wisconsin and determined the rates that result from those methods. Further implementation decisions were delegated to the Division Administrator for three issues where new data was presented in the compliance phase of this proceeding.

In a related proceeding, the Commission continues to evaluate TELRIC cost compliance for the cost of providing loop conditioning. Conditioning a loop removes devices that impede the transmission of broadband speeds on copper loops.

SBC Wisconsin Unbundling Requirements

The Commission has been active in evaluating SBC’s compliance with the requirements to provide access to particular network elements on an unbundled basis.

The Telecommunications Act of 1996 requires SBC to provide access to a network element if failure to provide access to such an element would impair a competitor’s ability to offer the services it seeks to offer or if proprietary elements are necessary to provide such services.

The FCC has developed a national list of UNEs that are required to be unbundled. The Commission also has state law authority to require unbundling of network elements beyond that required by the FCC. The

Commission required unbundled access to broadband loops, but stayed that requirement while it evaluates the FCC’s recent modifications to its national list of UNEs in its Triennial Review Order.

SBC Wisconsin’s Operational Support Systems

In January 2000, the Commission started its investigation into SBC Wisconsin’s (f/k/a Ameritech-Wisconsin) back office systems, or operational support systems (OSS). These are systems competitive local exchange carriers, or CLECs, depend on to resell SBC services or to lease certain portions of SBC’s network. Without these systems functioning properly and in a nondiscriminatory fashion, CLECs cannot effectively compete against SBC Wisconsin and SBC Wisconsin cannot gain approval to enter the interLATA toll market.

The Commission’s investigation is designed to enhance and improve these systems through a military-style test conducted by a neutral third party, BearingPoint, (f/k/a KPMG Consulting). Military-style testing requires testing until SBC Wisconsin passes the test. SBC has passed significant portions of the test. The remainder of the test is expected to be completed in late 2003, or early 2004. This investigation is also designed to establish, and periodically review and revise, a set of ongoing performance measures and a remedy plan. The remedy plan requires SBC to make payments to CLECs and to fund consumer education programs in the event SBC fails to perform up to its predetermineD performance measures. While the courts have vacated the Commission’s order with respect to SBC’s remedy plan, some CLECs have entered into remedy plan interconnection agreements.


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SBC Wisconsin Entry in InterLATA Long Distance Section 271 of the federal 1996

Telecommunications Act governs Regional Bell Operating Companies’ (RBOCs or BOCs) entry into in-region, interLATA (both intrastate and interstate) long distance service and requires that RBOCs apply to the Federal Communications Commission (FCC) for authority to provide this service in a particular state. Section 271 further requires that the FCC consult with the relevant state commission to verify RBOC compliance with the requirements of § 271, commonly known as “Track A” and the “Competitive Checklist.”

SBC is a RBOC, and as such, must establish compliance with the federal requirements. In July 2003, the Commission issued two written determinations wherein it found that SBC-Wisconsin complied with the competitive checklist. These determinations, along with other orders of the Commission, formed the basis of the Commission’s consultative report to the FCC. The FCC is expected to issue its determination in October 2003.

ETC designation granted to US Cellular

Under FCC rules, state commissions are required to designate providers as eligible telecommunications carriers (ETC). Designation as an ETC is required if a provider is to receive federal universal service funding. ETC designation is also required to receive funding from some, but not all, state universal service programs. The FCC established a set of minimum criteria that all ETCs must meet. The PSC established additional criteria.

In December 2002, the PSC granted ETC status to US Cellular with certain limitations. The Commission found that US

Cellular met the requirements for ETC designation: it will offer supported service to all requesting customers in its designation areas and will advertise these services.

Because US Cellular only wishes to obtain federal USF support, the Commission adopted the federal requirements for ETC status as the requirements that US Cellular must meet to obtain ETC status. The Commission relieved US Cellular from ETC obligations other than those imposed under federal law.

However, since US Cellular will not be subject to the state requirements and state obligations, the Commission required that US Cellular not apply for state USF money.

An appeal of the Commission’s decision is pending in court. (Ten other wireless carriers were similarly granted conditional ETC status in September 2003.)

Interconnection Agreements The federal Telecommunications Act of

1996, Public Law 104-104, 110 Stats. 56 (1996), creates a process with which a competitive local exchange carrier may petition this Commission for arbitration of the rates, terms and conditions of an interconnection agreement to provide an interconnected local telecommunications service.

There are two decision points for Commission action in an arbitration proceeding. First, after a carrier files a petition requesting arbitration of the disputed terms of an interconnection agreement with another carrier, the Commission appoints a three member arbitration panel to consider the disputed issues identified by the parties and issue an arbitration award resolving those disputes.

Second, after the parties submit an interconnection agreement that conforms to the arbitration award, the Commission


33

decides whether to approve or reject the filed agreement.

During the period July 1, 2001, to June 30, 2003, the Commission conducted five arbitration proceedings pursuant to the federal Act and 47 U.S.C. § 252. Arbitration panels appointed by the Commission issued three arbitration awards, and the Commission issued orders approving or rejecting three interconnection agreements. Companies participating in these proceedings included Ameritech, Verizon, CenturyTel, AT&T, McLeod USA, Level3, LCI, and JSM Telepage.

Through the Commission’s web site, the actual interconnection agreements are available in both Microsoft Word and PDF formats. These documents are used in a variety of ways, including as a method for a utility to “opt-into” an existing agreement. This resource greatly enhances competition by making it easy to have any agreement from the last three years at your fingertips. The website also makes recalling only agreements with certain companies in a restricted time frame very easy. Although Federal Law gives 90 days to approve such agreements, the Commission typically approves them within 30 days. During the biennium, the Commission approved nearly 350 voluntary interconnection agreements.

Voice Over Internet Protocol (VOIP)

This issue has gained momentum both in Wisconsin and nationally as some internet providers began to heavily market their services to broadband customers across the country in January 2003. The Commission has not directly or separately addressed Voice Over Internet Protocol as either requiring or being free from regulation. There is no distinction in the statutes for new or different technologies that provide the same functionality. Based on the

increased demand and provision of end-to-end VOIP, the Commission may need to address this matter in a more public and detailed forum.

Rates Rate Proceedings Traditional rate cases are generally a

thing of the past. With companies operating under price regulation or alternative regulation, and with the provisions for rate changes by small telecommunications utilities, the Commission is normally not involved in the review and approval of rate changes. However, three rate cases for mid-sized telecommunications utilities occurred during the past biennium.

CenturyTel of Central Wisconsin, LLC (Central) and Telephone USA of Wisconsin, LLC (TUSA) filed applications with the Commission on January 18, 2002, requesting authority to increase rates. Central requested a revenue increase of $4.7 million above the $4.3 million granted on an interim basis, subject to refund, in August 2001. The Commission authorized an increase of $2.8 million above the interim increase.

TUSA requested $10.9 million in addition to its interim increase of $3.7 million. The Commission authorized $7.9 million of that request. The September 24, 2002 order in the combined proceeding was appealed by applicants and by AT&T and MCI. In January 2003, the Commission issued an amended order keeping the same revenue increases for both companies, but reallocating the increases among residential rates and access charges for TUSA. That decision has been appealed to the court.

CenturyTel of the Midwest–Kendall, LLC (Kendall) had been granted an interim increase in revenues of $8.8 million in April, 2001. In the second phase of the proceeding, Kendall requested an additional


34

$5.7 million permanent annual increase in rates and stated that no refund is necessary for the subject-to-refund period during which interim rates were in effect. The Commission authorized a decrease of $.5 million and ordered refunds of the excess amounts collected by Kendall subject to refund.

Small telecommunications utilities (those with less than 50,000 access lines) may increase rates by notice to consumers under Wis. Stat. §§ 196.213 and 196.215. Unless customers of those companies file a valid petition, the rates become effective, and the Commission is not involved in the rate change. Those companies that had rate increases effective under this process in the period of July 1, 2001, to June 30, 2003, are as follows:

Baldwin Telephone Company Belmont Telephone Company Bloomer Telephone Company Cuba City Telephone Exchange Company Farmers Independent Telephone Company Hillsboro Telephone Company Lakefield Telephone Company Luck Telephone Company Milltown Mutual Telephone Company Mosinee Telephone Company Northeast Telephone Company Wood County Telephone Company

Seven additional companies had notified their customers of a rate increase under this process during the biennium; however, the higher rates were not effective until after June 30, 2003.

Infrastructure Report to the Legislature

The fourth infrastructure report was issued in February 2002. The fifth infrastructure report is in progress under 05-

ST-113 and is planned to be completed in January 2004. The upcoming report will provide an update on the infrastructure covered in previous reports and indicate new infrastructure additions, distance learning, libraries etc.

Wisconsin Builders Association Complaint

A formal complaint was filed by the Wisconsin Builders Association (WBA) against Ameritech regarding the construction charges policy SBC instituted which assessed charges to developers in some cases when telecommunications facilities were extended into areas where facilities did not exist or were not available. WBA argued that no charges should apply in these instances. The WBA requested cumulative and alternative remedies in this case. The complaint under docket 6720-TI-167 was resolved by a settlement agreement between SBC and the WBA. Under the agreement, WBA agreed to withdraw its complaint in exchange for SBC’s agreement to withdraw the construction changes tariff amendments to which WBA objected. The Commission ordered SBC to withdraw the tariff as agreed with the WBA and SBC complied with this order.

AmeriVoice On September 27, 2002, the

Commission issued a Notice of Investigation and Emergency Order in response to several violations of Commission rules regarding disconnection notices, long distance blocking fees, failure to provide Lifeline and LinkUp services, and the charging of late fees, as well as many other violations by AmeriVoice. On November 1, 2002, the Commission, through its attorneys, entered into a stipulated agreement that AmeriVoice would come into compliance with Commission rules and issue appropriate


35

credits and refunds for late fees and long distance blocking charges.

Pursuant to the stipulation AmeriVoice was granted continued certification. Commission staff carefully reviewed and monitored AmeriVoice's activities from November 1, 2002, to June 30, 2003. Subsequent to June 30, 2002, AmeriVoice has continued to incur complaints for similar violations and has informed the Commission it intends to go out of business effective October 15, 2003. It has also come to the Commission’s attention that AmeriVoice may have misled the Commission regarding the refunds it claimed it had issued to customers in November 2002.

Continuing Telecommunications

Consumer Education Efforts The Commission continues to

aggressively pursue its efforts to educate Wisconsin citizens regarding telecommunications consumer issues. This has involved a statewide, multimedia education campaign for consumers of telecommunications services.

In the first quarter of 2002, public service announcements (PSA) produced for the Commission aired on radio and television stations throughout the state. These PSAs informed consumers about the availability of long distance price comparisons, and two Universal Service Fund programs, Lifeline and LinkUp.

The Commission continues to produce and update a series of brochures, which

contain helpful consumer tips about various telecommunications topics.

Price Regulation A provision of 1993 Wisconsin Act 496 allows companies to elect a reduced form of regulation called price regulation. See Wis. Stat. § 196.196. To date, SBC and Verizon are the only companies that have elected price regulation. Currently, average rates for price regulated telecommunications services are governed by an index, which changes based on inflation, less 3 percent (2 percent for companies with less than 500,000 access lines), plus or minus incentives and penalties related to infrastructure and service quality. A rulemaking docket is examining whether to adjust the 2 and 3 percent productivity offsets.

Productivity rulemaking The Commission issued a Proposed

Order Adopting Rules in October 2001 that would have modified the productivity factor. The Senate Committee on Health, Utilities, Veterans and Military Affairs (Senate Committee) asked the Commission to consider modifications to its proposed rule. Specifically, the Senate Committee requested that the Commission appoint an independent consultant to conduct a productivity study, using the total factor productivity (TFP) method.

The Commission agreed to consider modifying its proposed rule, and hired two independent consultants. The consultants have completed their studies, and the Commission is reconciling the results of each.


36

Price Regulation Rulemaking In November 2001, the Commission

implemented various rule changes to price regulation deemed necessary as a result of the Commission’s 1999 review of price regulation, and the annual reviews of price regulation for each price-regulated telecommunications utility. These changes included increasing the maximum service quality disincentive percentage slightly, offset by a corresponding decrease in the maximum infrastructure disincentive percentage, adding two additional service quality components approved by the Commission, and allowing for alternative service quality disincentive mechanisms.

Price Regulation Rate Adjustments

Under the price regulation mechanism, in October 2001, the Commission ordered SBC to decrease its rates for price-regulated services by an average of 0.02 percent. To achieve this change, SBC reduced its residential rate per call for calls over 1,200 from 5 cents to 4 cents. In October 2002, the Commission ordered SBC to decrease its rates for price-regulated services by an average of 1.22 percent. To achieve this change, SBC made the following reductions: the residential rate per call for the first 60 calls from 5 cents to 4 cents per call, the residential rate per call for calls over 1,200 from 4 cents to 2 cents, the residential Extended Community Calling rate from 4.3 cents to 3.4 cents per minute, the service installation charge from $25 to $21.90, the basic small business flat rate from $14.85 to $14.65, and various reductions in local saver pack rates. This was somewhat offset by an increase in the basic residential flat rate from $6.60 to $7.20. The net of these changes achieved the required reduction.

In July 2002, the Commission authorized Verizon to increase rates by 0.90

percent, pursuant to the price regulation formula. To achieve this change, Verizon elected to increase its residential Econo Pak rate from $11.52 to $12.31, its residential value pak rate from $14.40 to $14.41, and its small business rate from $25.38 to $25.70. In July 2003, the Commission authorized Verizon to increase rates by 0.23 percent. Verizon has yet to exercise its option to increase rates.

Alternative Service Quality Standards

The Commission established alternative service quality mechanisms for service quality to be used in calculating the service quality disincentive for price regulation filings beginning in 2004. The new standards eliminated a provision that automatically tightened the standards whenever performance improved, clarified when non-routine trouble reports could be excluded from results, and made other clarifications of the measurements.

Alternative Regulation 1993 Wisconsin Act 496 directed the

Commission to regulate with the goal of developing alternative forms of regulation and to develop and approve an incentive regulatory plan for each telecommunications utility. The Commission, to date, has approved alternative regulatory plans for 25 telecommunications utilities. These plans have generally allowed for increases in local exchange rates and decreases in access rates paid by long distance companies, included provisions to facilitate a transition to competition, removed earnings restrictions, provided discounts to schools and libraries, and guaranteed maintenance of service quality and infrastructure improvement. While some of the plans have been approved for a limited duration, others have been approved for indefinite terms.


37

A rulemaking docket is in progress that may establish several model plans, which companies could elect automatically. The model plans were developed by a small PSC/industry workgroup. This docket may also establish guidelines for filing and review of company-specific alternative regulation plan proposals.

Eleva Petition for Extended Area Service

The Commission investigated a request on behalf of customers of the Eleva

exchange who wanted to have the Eau Claire exchange included in their local calling area. The rules governing this process are set forth in ch. PSC 167 of the Admin. Code. Following the determination of costs, customers were surveyed regarding their willingness to pay an additional $9.75 per month for this service. The majority of customers were not willing to pay this much and the Commission denied their request.


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UNIVERSAL SERVICE FUND

Lifeline and LinkUp Program and Other Programs for Low

Income Customers The Lifeline and LinkUp programs

reduce the monthly rate connection charges for telephone service for low-income customers. All local exchange service providers for residential customers are required to offer Lifeline and LinkUp programs to eligible customers.

In a continuing effort to better inform customers of the Lifeline and LinkUp programs, the PSC sponsored public service radio and television advertisements that ran in spring 2002. The Lifeline and LinkUp brochure was also developed for distribution to customers. These brochures, along with a bulletin describing various USF programs available to customers, were sent to over 200 W-2 agencies and other human service agencies. In addition, the Commission sent out about 25,000 copies of the Lifeline and Linkup brochure in response to requests from social service agencies and organizations.

The expenditures for these two programs have increased significantly in the past five years. In calendar year 1998, the expenditures for Lifeline were $284,267 and for LinkUp were $174,008. Outreach efforts resulted in fiscal year 2003 expenditures that had risen to $1,022,734 for Lifeline and $662,030 for LinkUp.

Nonprofit Access Grant Program

This USF grant program had $500,000 allocated to it for each fiscal year. The grant dollars are available to provide funding to

nonprofit groups to facilitate affordable access to telecommunications or information services. Applicants must be nonprofit organizations and must provide a 50 percent match for the total project cost. The projects must assist in providing telecommunication or information services to low-income or disabled customers or must assist in deploying advanced telecommunication services.

In the second year of the grant program, 18 applications were submitted. The Commission approved 12 of the grants for a total of $418,255. The organizations and projects that received funding were:

AGAPE Community Center to provide access to Internet services and training to low-income youth and adults.

Access to Independence to provide assistive computer equipment and software to adults with disabilities.

CSD of Wisconsin to implement a video relay service pilot program for deaf and hard of hearing individuals.

Central Wisconsin Community Action Council to provide telephone and Internet access to low income clients.

Coalition of Wisconsin Aging Groups to provide videoconferencing capability to its Center.

Community Action Agency to provide Internet access and training to low income entrepreneurs.

Independent Living, Inc. to provide Internet access to older adults.

Silver Spring Neighborhood Center to provide a computer lending library, training and support services to low income families.


39

Society’s Assets to provide assistive technology information and in-home assessments to those with disabilities.

Southwestern Community Action Program to provide Internet access and training to low-income families.

United Cerebral Palsy of SE Wis. to develop an Assistive Technology Center for job placement for individuals with disabilities.

Wisconsin Community Action Program to provide low-income families with education and technical support for computer and Internet use.

In the third year of the grant program, 22 applications were submitted. The Commission approved 18 of the grants for a total of $474,000. The organizations and projects that received funding were:

Boys and Girls Club of Greater Milwaukee provides access to Internet services and training at one of its youth centers.

Center for Deaf and Hard of Hearing to provide in-home assistance and training to low-income disabled individuals and to install equipment.

Central Wisconsin Community Action Council to provide telephone and Internet access to low income clients.

Community Action Coalition for South Central Wisconsin to assist low income residents in obtaining telephone service.

Community Advocates provides outreach and education to households without telephone service and works toward getting them service.

Community Housing and Services to provide access for the low-income to the telephone and Internet.

Cornucopia provides access to desktop computing and the Internet to people with mental illnesses.

DANEnet provides access to Internet service at computer labs for low-income adults.

Esperanza Unida to provide access and training to low income, unemployed residents for Internet job searches.

Hunger Task Force to develop an electronic system so low income shoppers can purchase fresh food at the market.

Independence First to provide Internet training and service to persons with disabilities.

Independent Living Resources to provide outreach to persons with disabilities on the availability of assistance and access to specialized telecommunications technology.

New Concept Self Development Center to develop a adult education cyber lab for low income residents for Internet access.

Society’s Assets to provide assistive technology information and in-home assessments to those with disabilities.

United Cerebral Palsy of SE Wis. to develop an Assistive Technology Center for job placement for individuals with disabilities.

Western Dairyland Economic Opportunity Council to provide computer and Internet training to low-income residents seeking employment.

Wisconsin Council of the Blind to provide Internet access and training to blind or visually impaired individuals.

YMCA Milwaukee to install upgraded equipment to improve Internet access at several sites.

Telemedicine Grant Program This USF grant program has a budget

ceiling of $500,000 per fiscal year. The grant dollars are available to provide


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funding to nonprofit medical clinics and public health agencies to purchase telecommunications equipment. Applicants for this program must be a nonprofit clinic serving federally designated health professional shortage areas, medically underserved areas, or medically underserved populations, or are a public health agency. Purchase of medical telecommunications equipment under this grant program must promote technologically advanced medical services, enhance access to medical care in rural areas of the state, or enhance access to medical care to underserved populations or persons with disabilities in the state.

In the second year of the grant program, 25 applications were submitted. The Commission approved 13 of the grants for a total of $500,000. Organizations that received funding to purchase equipment were:

Aurora Health Care-Milwaukee to purchase video conferencing equipment.

Chippewa Valley Hospital-Durand to purchase teleradiology equipment.

Hess Memorial Hospital – Mauston to purchase videoconferencing equipment.

Home Health United Visiting Nurse-Madison to purchase upgrades to the home monitoring technology system.

Memorial Hospital-Darlington to purchase telephone system equipment.

Nicolet Medical and Dental Clinic-Mountain to purchase teleradiology equipment.

Richland Hospital-Richland Center to purchase a digital system for transcription of records.

Sacred Heart Hospital-Tomahawk to purchase teleradiology equipment.

16th Street Community Health Center-Milwaukee to purchase an upgraded phone system.

ThedaCare-Appleton to purchase videoconferencing equipment for pathologist consultations.

UW Institute for Health/Silver Spring Neighborhood Center-Milwaukee to purchase and electronic health records system.

Visiting Nurse Association-Milwaukee to purchase digital cameras and modems to transmit and store photos electronically.

Wild Rose Community Hospital-Wild Rose to purchase a telecommunications system with voicemail.

In the third year of the grant program, 18 applications were submitted. The Commission approved 11 of the grants for a total of $500,000. The organizations that received funding to purchase equipment were:

Amery Regional Medical Center-Amery to purchase a dictation and transcription system.

County Memorial Hospital-Oconto Falls to purchase a fetal/maternal remote monitoring system.

Gundersen Clinic-Lacrosse and Whitehall to purchase videoconferencing equipment to connect the hospital and clinic.

Healthcare for the Homeless to purchase videoconferencing equipment to provide remote psychiatric services.

Marshfield Clinic-Marshfield to purchase digital medical equipment for remote access for exam rooms via audio/video bridge.

Planned Parenthood Milwaukee to purchase networking equipment for the organization’s database.

Price County Human Services-Phillips to purchase videoconferencing equipment for remote psychiatric services.


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Richland County Health and Human Services-Richland County to purchase video conferencing for expert consultations.

Scenic Bluff Health Center-Cashton to purchase videoconferencing equipment and fiber optic connection.

UW Programs/Fox Valley Family Practice-Menasha to purchase videoconferencing equipment and diagnostic telemedicine equipment.

Waupun Memorial Hospital-Waupun to purchase videoconferencing equipment to connect the clinics and Hospital.

Public Interest Pay Telephone Program

The Public Interest Pay Telephone Program is managed by the Public Interest Pay Telephone Administration. Under this program, when telephones are designated as Public Interest Pay Telephones, the provider of that telephone may be reimbursed for the costs associated with the provision of the service less any revenues generated at the pay telephone.

Telephones can be approved to be Public Interest Pay Telephones if the Commission determines that the public health, safety, and welfare is jeopardized without the telephone, yet insufficient demand, usage or other private or public funds are available to assure installation and continued operation of the telephone. Factors that favor designation of a Public Interest Pay Telephone are: revenues are less than $90/month [$120 if with a

tele-typewriter (TTY)], the telephone is outside or available 24 hours per day, the telephone is accessible to the general public, no other pay telephone is located within 500 feet, and the pay telephone allows coin calls.

The program began in January 2001, and by the end of FY03, 135 public interest pay telephones were approved. Five providers participate in the program. These telephones are located around all corners of the state—from Grantsburg to Gill’s Rock to Brodhead and to Milwaukee. Monthly subsidy levels for these telephones totals over $11,100.

Telecommunications Equipment Purchase Program

(TEPP) The TEPP is a program where

customers may apply for a voucher to assist them in the purchase of equipment necessary for affordable access to and comparable use of essential services. The voucher amounts are intended to make the cost of purchasing special equipment comparable to the cost of purchasing a quality standard telephone and related features.

Expenditures for the TEPP for the past two years have remained fairly steady. FY02 expenditures for this program were $1.64 million and for FY03 were $1.44 million. Continued usage of this voucher program enables more hearing and mobility-impaired consumers to have comparable access to telephone service.


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ADMINISTRATIVE SERVICES

Alternative Work Patterns The Commission continues to have a

strong Alternative Work Patterns (AWP) program with a high rate of participation. Of the Commission employees, approximately 70 percent work a nonstandard or flexible schedule. Only 25 percent of employees work a standard 7:45 a.m. to 4:30 p.m. Monday through Friday schedule. Five percent work a part-time schedule, varying from half time to 90 percent.

AWP benefits the agency and employees alike and maximizes the employment options available to existing and potential state employees.

Affirmative Action The Commission has a permanent

Affirmative Action Advisory Council (Council). The Council’s membership represents all divisions in the agency. The Council’s responsibilities are to assist in the development and implementation of affirmative action policies and program areas, to monitor hiring and promotional activities, to develop and coordinate affirmative action training, and to inform new employees of affirmative action laws, policies, and complaint procedures.

The Council participated in a variety of program activities during the biennium including:

Assisting with the agency’s participation in the Summer Affirmative Action Intern Program. This statewide program provides valuable training, experience, and exposure to the Wisconsin civil service system for racial/ethnic minority and women students and students with disabilities. In May 2003, the Electric Division hired a UW-

Whitewater student to develop new publication information pamphlets.

Sponsoring “Career Day” programs in April 2002 and 2003. In conjunction with the national “Take Our Daughters and Sons to Work Day” program, a total of 25 children attended the two events which included pizza lunches and fun-filled educational workshops.

Coordinating the agency’s Annual Diversity Week celebrations in October 2001 and October 2002. In addition to hosting “ethnic potlucks” each year, training workshops were provided on topics such as “Communicating with People with Disabilities,” “Wealth, Innovation, and Diversity,” “Italian Heritage in Madison’s Greenbush,” “The American Justification for Diversity,” and “African Storytelling.”

Commemorating national diversity observances. Throughout the biennium, special exhibits/posters were on display for events such as Hispanic Heritage Month, National Disability Employment Awareness Month, Native American Indian Heritage Month, Martin Luther King Day, Black History Month, Women’s History Month, Asian American Heritage Month and Juneteenth Day. For many of these events, videos were also shown during brownbag lunch sessions.

PSC Receives 2001 Diversity Award

At an awards ceremony held at the UW-Madison’s Pyle Center in October 2001, the Public Service Commission received the prestigious 2001 Diversity Award from the State Council on Affirmative Action.


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The PSC and the Department of Workforce Development were selected top award recipients for excellence in their overall diversity achievements, including Equal Employment Opportunity and Affirmative Action programming, disability services, retention, and upward mobility. Six other agencies and university campuses were also recognized for special achievements in employment opportunities or for specific program merit.

A copy of the PSC’s 2001 Diversity Award Application can be seen at the Office of State Employment Relations web site: http://oser.state.wi.us.

Wisconsin Works Program The Commission has been an active

participant in the Wisconsin Works (W-2) program since its inception in 1997.

The Commission has developed two Community Service Jobs for W-2 clients. These temporary positions were created to provide individuals with the skills and hands on experience needed to secure permanent employment in the work force. The training includes base skills, typing, word processing, telephone answering, receptionist duties, mail handling, supply ordering, and exposure to computer hardware and office software applications. The Commission has employed 21 W-2 interns to date. In addition, between July 1, 1994, and June 30, 2003, the Commission hired 14 AFDC/W-2 customers into permanent classified positions, including one during the last biennium.

Office of Information Technology

In the 2001-2003 biennium, the PSC continued to bring the latest technology to bear on the task of meeting its business needs.

The PSC has already automated many of its primary business and administrative functions. The following applications have been developed to address business needs: Case Management System, Customer Contact System, Utility Name System, and Annual Report System (2). Administrative functions have been addressed by the Time and Leave Reporting System, the Employee Information System, the Electronic Forms System, and the PSC Billing System. Over the past biennium, the PSC has increasingly focused on making much of its information available over the Internet and on its recently implemented Intranet. To this end, all annual report information is now accessible on the Internet and utilities can now file data for Purchased Water Adjustments and Purchased Power Adjustments through applications on the PSC’s Web site. During this biennium, the PSC also re-designed its entire Web site to make it more visually appealing and easier to navigate.

The PSC also significantly upgraded its IT infrastructure in this biennium. The first major project was to convert its network to Gigabit Ethernet. All network switches and all network-attached devices were upgraded to provide the fastest connections currently available to each and every user and server. All desktop computers are connected through a Gigabit Ethernet connection, as are all servers. This has significantly enhanced response time for all applications and file access functions. The PSC also replaced several servers and set up clustered servers for its major file/application server and its e-mail services. This has dramatically improved the reliability of the PSC’s servers. Finally, the PSC added new fax server software to provide desktop faxing capability, as well as digital scan-and-send capability for exchanging PDF documents.

The PSC also became one of the first agencies to implement Exchange 2000


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e-mail services in this biennium. This allowed the PSC to perform many more of its collaboration and communication functions with much greater efficiency and ease of use. The PSC also implemented Virtual Private Networking (VPN) service to allow its staff members with high-speed Internet connections at home to access their files and e-mail services at the PSC more productively.

In this biennium, the PSC began analysis and development of its Electronic Regulatory Filing (ERF) System. The plan for this project is to implement electronic filing of all formal cases at the PSC by January 1, 2005. A pilot project will begin in the fall of 2003 and a significant subset of all cases will be required to file electronically starting on January 1, 2004. The online, web-based system allows parties to PSC formal cases to file up to 25

documents at one time and to classify those documents in one of the 15 document types. Once these documents are accepted for filing, they will immediately become available to the parties and to the public at the PSC’s web site document repository. All documents will be filed in Acrobat PDF format for easy viewing and printing.

The PSC made a number of improvements during the biennium to its PC/LAN environment. All users were upgraded to MS Office XP Professional and all PCs were upgraded to the Windows XP Professional operating system. The PSC also implemented a number of other software-related improvements in terms of producing PDF documents and improved back-up capabilities. As the biennium draws to a close, the PSC is in the process of upgrading all of its servers to Windows 2003 Server and all of its desktop PCs to Office 2003. These improvements will prepare the PSC and its staff for the world of electronic documents that lies ahead of it.


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LIST OF ACRONYMS

Act 496 1993 Wisconsin Act 496 AMR Automated Meter Reading ANR ANR Pipeline Company ATC American Transmission Company AWP Alternative Work Patterns BadgerGen Badger Generating Company, LLC Calpine Calpine Fond du Lac Corporation CIAC Contributions in Aid of Construction CLECs Local Exchange Carriers CPCN Certificate of Public Convenience and Necessity DATCP Department of Agriculture, Trade and Consumer Protection DEIS Draft Environmental Impact Statement DG Distributed Generation DNR Department of Natural Resources DOA Department of Administration DOJ Department of Justice DOR Department of Revenue EIS Environmental Impact Statement FERC Federal Energy Regulatory Commission Fox Energy Fox Energy Company, LLC Guardian Guardian Pipeline ILECs Local Exchange Companies IT Information Technology Kendall CenturyTel of the Midwest-Kendall kV Kilovolt MGE Madison Gas and Electric Company Mirant Mirant Portage County, LLC MP Minnesota Power MW Megawatts MWU Madison Water Utility NSP Northern States Power OSS Operational Support Systems PSC Public Service Commission of Wisconsin PTF-2 Power the Future-2 REPS Rural Electric Power Services RFP Request for Proposal Riverside Riverside Energy Center Rock River Energy

Rock River Energy, LLC

RPS Renewable Portfolio Standard SEA Strategic Energy Assessment SV Stray Voltage TCA Tabors, Caramanis and Associates TEPP Telecommunications Equipment Purchase Program


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TTY Tele-Typewriter UNE Unbundled Network Elements USF Universal Service Fund USOA Uniform System of Accounts WBA Wisconsin Builders Association WEC Wisconsin Energy Corporation WE-GO Wisconsin Electric-Wisconsin Gas WEPCO Wisconsin Electric Power Company WF&L Wisconsin Fuel and Light Company WGC Wisconsin Gas Company WICOR WICOR, Inc. WP&L Wisconsin Power and Light Company WPPI Wisconsin Public Power, Inc. WPS Wisconsin Public Service Corporation WUMS Wisconsin Upper Michigan System

* * *


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CONTACT INFORMATION

Address: Public Service Commission of Wisconsin

610 North Whitney Way

P.O. Box 7854

Madison, WI 53707-7854

Telephone Numbers:

General (608) 266-5481

Fax (608) 266-3957

Consumer Affairs (608) 266-2001 or 1 (800) 225-7729

Web Addresses: E-mail [email protected]

Internet Site: http://psc.wi.gov/

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